Bank of America Issues Warning: U.S. Dollar Could Fall More This Summer

Bank of America Forecasts Continued Weakness for U.S. Dollar This Summer

Bank of America has warned that the U.S. dollar may face further declines this summer after already falling sharply earlier in 2025.

The dollar index, measuring the greenback against major global currencies, has dropped about 9% so far this year, hitting 99.74. The slide is largely attributed to escalating trade tensions under President Trump’s tariff policies, prompting investors to move away from U.S. assets.

In a recent client report, Bank of America’s FX research team, led by Athanasios Vamvakidis, highlighted that tariffs are inflicting growing damage on the U.S. economy, which is heavily reliant on international trade.

Despite some economic resilience supported by tax reforms and the easing of fiscal cuts, the report stresses that ongoing policy uncertainties are causing companies to delay hiring and investment decisions. The analysts foresee tariffs increasing beyond current levels, adding pressure on growth.

Furthermore, the combination of expanding fiscal deficits and record-high debt is pushing borrowing costs higher, while the Federal Reserve’s ability to combat inflation is limited.

Key economic indicators, including the ISM manufacturing survey and the Dallas Fed’s weekly economic index, have weakened recently, suggesting a potential economic slowdown in the near term.

A weaker dollar, however, often boosts demand for dollar-priced assets such as gold and bitcoin, offering a silver lining for investors in these markets.