Credit score Agricole: Right here is why we preserve an above-consensus USD outlook

Credit score Agricole maintains an above-consensus medium-term bullish outlook on the USD, anticipating a restoration in H2 2025 and 2026 pushed by supportive fiscal coverage, easing monetary situations, and sticky inflation. Whereas some traders argue structural headwinds might undermine the greenback, the financial institution sees these dangers as overstated.

Key Factors:

• Close to-Time period Restoration Drivers: Credit score Agricole sees a probable US progress rebound in late 2025 and 2026 on account of:

  1. Extension of private revenue tax cuts

  2. Easing commerce tensions

  3. Looser monetary situations

• Fed Outlook: Persistent inflation might restrict the scope of charge cuts, supporting USD carry attraction.

• Skepticism on De-Dollarization: Whereas some traders cite Trump’s weak greenback bias and the chance of a “Mar-a-Lago accord” as threats, Credit score Agricole sees no credible various to the USD as a reserve forex.

• US Coverage Messaging: Treasury Secretary Bessent has emphasised a sturdy USD, and Trump has backed off assaults on Fed independence, each considered as stabilizing indicators.

Conclusion:

Regardless of ongoing debate round structural dangers to the greenback, Credit score Agricole sees basic power and coverage dynamics as supportive. The USD’s reserve standing and yield benefit stay intact, reinforcing the financial institution’s above-consensus bullish stance for the medium time period.

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