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The Dollar can stay supported, say analysts at BCA Research, the independent research house.
"Our U.S. Political Strategy team recommends staying long the U.S. dollar," says a recent note from the firm.
The call comes amidst a settling in the Dollar following a strong selloff in the first half of the year.
Those losses leave the Pound up 8.0% against the Dollar in 2025 while the Euro is up 12.75%. The Dollar index, a measure of broad USD performance, is down 9.60%, at levels last seen in 2022.
Lately, the Dollar has risen off its recent lows and pushed the likes of GBP/USD and EUR/USD from their highs.
BCA says further support is possible amidst ongoing U.S. policy uncertainty. Also, the U.S. remains an attractive destination for foreign investor capital, which is expected to provide a fundamental underpinning to the Greenback.
"Trump's peak political capital drives near-term policy volatility and renewed support for U.S. assets. Market optimism is underpinned by AI enthusiasm and the prospect of Fed easing, but Trump’s string of wins in trade, immigration, and federal cuts ensures a continued push for aggressive policies," says BCA.
According to researchers, near-term policy innovation will come via executive action, foreign policy, or monetary levers, not Congress. "After passing the One Big Beautiful Bill Act on party lines, there is little room for further fiscal expansion. GOP prospects for a second reconciliation bill are low."
BCA's economists expect U.S. assets to keep outperforming, "with the dollar supported by relative strength, safe-haven demand, and China's ongoing deflation."
"The DXY may reverse only once Fed rate cuts are fully priced. Until then, stay long the dollar as markets navigate weak oil prices, tariff rulings, elections, and the broader implications of Trump’s policy agenda," says BCA.