The U.S. dollar is expected to weaken further, according to Bank of America Global Research, with the New Zealand dollar positioned to outperform among G10 currencies.
Analysts at the bank cited structural factors including a potential slowdown in U.S. economic growth and expectations of a more dovish Federal Reserve policy stance as key drivers of dollar depreciation. The outlook assumes continued divergence between U.S. and global monetary policy, which could sustain demand for higher-yielding currencies such as the New Zealand dollar.
The New Zealand currency has gained ground against the dollar in recent sessions, reflecting improved risk sentiment and expectations of resilient commodity-driven growth in the region. Bank of America’s projections align with broader market sentiment, where traders have increasingly priced in a peak in U.S. interest rates and a gradual easing cycle.
The bank’s foreign exchange strategists did not provide a specific target level for the New Zealand dollar but emphasized the potential for sustained appreciation against the greenback over the medium term. The New Zealand dollar’s performance is also supported by its status as a high-beta currency, often sensitive to shifts in global risk appetite and commodity price trends.
The U.S. dollar index, which measures the greenback against a basket of major currencies, has declined by approximately 2% over the past month, coinciding with a rise in the New Zealand dollar’s exchange rate. Analysts noted that further dollar weakness could be driven by softer U.S. economic data or a more pronounced shift in Fed policy expectations.
Bank of America’s assessment adds to a growing consensus among major banks that the U.S. dollar may face prolonged pressure, particularly if global growth remains uneven and central banks outside the U.S. maintain tighter monetary stances.
