NAB Predicts Prolonged US Dollar Weakness, Sees Aussie Rising to US70¢

Highlights:

• NAB predicts a prolonged decline in the US dollar, expecting the US Dollar Index to fall 11.5% to 87.74 by the end of 2026.
• The Australian dollar is forecast to strengthen, reaching US70¢ by the end of 2025 and US75¢ in 2026, supported by global capital reallocation.
• At the time of writing, the AUD hit a year-to-date high of US64.81¢, boosted by China’s offshore yuan surging to a six-month high.

NAB Issues Bear Market Warning for US Dollar

National Australia Bank Limited (ASX: NAB) has issued a bold forecast, warning clients of a “multi-year bear market” for the US dollar. The bank expects this shift to drive the Australian dollar (AUD) higher, predicting it will reach US70¢ by the end of 2025 and climb further to US75¢ in 2026.

NAB’s revised outlook signals the end of the so-called era of “US exceptionalism,” where the greenback benefited from strong capital inflows and superior economic performance relative to other developed nations. Now, the bank says global capital is being reallocated, with investors showing growing interest in non-US markets.

Aussie Dollar Gains Ground Amid Yuan Rally

At the time of writing, the Australian dollar had reached a year-to-date high of US64.81¢. This surge was supported by China’s offshore yuan, which also rose to a six-month peak, further weakening the US dollar’s dominance in the region.

NAB forecasts the US Dollar Index will fall by 11.5% over the next 18 months, bottoming out at 87.74 points by the end of 2026. This anticipated downturn is expected to provide a tailwind for the Australian dollar and other alternative currencies.

Global Capital Flows to Diversify Away from US

As inflation pressures ease and interest rate differentials narrow, NAB believes investors will seek higher returns outside the United States. The expected weakening of the greenback could have wide-reaching implications for trade, investment strategies, and commodity prices globally.

With confidence rising in Australia’s economic resilience and China showing renewed strength, the Australian dollar may be poised for a sustained climb through the remainder of 2025.

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