US Dollar to Weaken but at a Slower Pace Than 2025, Deutsche Bank’s Saravelos Says

Summary

George Saravelos, Deutsche Bank's global head of FX research, expects the US dollar to weaken further in 2026 but at a slower pace than 2025's record drop. He attributes the view to cyclical factors: the dollar losing its highest-yielding DM status, global growth broadening beyond the US, and the large US external deficit reliant on inflows. He dismisses a structural dollar-decline thesis, noting reserve and payment dominance changes over decades. The host asks how to express the view, but Saravelos focuses on the rationale.

• Deutsche Bank's George Saravelos projects further US dollar weakness in 2026, slower than 2025.
• 2025 saw the second-largest annual dollar drop since Bretton Woods.
• The dollar is no longer the highest-yielding developed-market currency as the Fed cuts and others pause.
• Australia and Norway currencies have taken on the high-yield property.
• Global growth is broadening beyond the US, with Europe fiscal stimulus and Japan potentially joining.
• The US external deficit remains large and reliant on inflows, adding to dollar bearishness.
• Saravelos says dollar dominance in payments and reserves takes decades to change.
• The host asks how to play the dollar view, but the guest focuses on the why.