In a note to clients, the bank outlined several persistent drivers behind its negative USD stance. These include
signs of slowing U.S. economic momentum, ongoing fiscal and monetary stimulus outside the U.S., and low energy prices that support global demand.“The direction of travel across these dimensions has remained towards dollar weakening in recent weeks,” analysts wrote, highlighting softening data across a range of indicators, including jobless claims, services PMIs, construction, and auto sales. While the recent payrolls report was more mixed, the bank expects U.S. growth to decelerate more than in other developed and emerging markets this year.
Looking ahead to 2025, JP Morgan sees the U.S. and several other economies slowing, while others — including the Australian and New Zealand dollars, Norwegian krone, euro, and yen — are likely to benefit in developed markets. Among emerging markets, the bank expects stronger performance in EMEA currencies.
JP Morgan also points to a significant shift in market expectations: the terminal rate priced for the Federal Reserve has fallen, even as the term premium on U.S. bonds has increased — a combination it describes as a “USD-negative cocktail.”
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