Bank of America: Rate Cut and High Inflation Will Weigh on Dollar

On August 21st, Alex Cohen of Bank of America stated in a report that since the Federal Reserve seems ready to resume rate cuts while inflation remains at a high level, the US dollar may further decline. He indicated that the worse-than-expected July nonfarm payroll data and concerns about the Fed's independence have led market expectations for a quicker and larger rate cut. Despite inflation still showing stubborn signs, "implementing potential rate cuts as inflation rises has created a favorable environment for the depreciation of the dollar." Bank of America anticipates that the euro to dollar (EUR/USD) will rise from the current 1.1620 to 1.20 by the end of the year and will further increase to 1.25 by the end of 2026. (FXStreet)