Bank of America: The US dollar may remain strong in the short term, but it is expected to weaken in the second half of the year

The US dollar is the most overvalued G-10 currency, and due to the inflation policy prospects of US President-elect Donald Trump, it may remain strong in the short term, according to a report by Athanasios Vamvakidis, a foreign exchange strategist at Bank of America. He stated that after robust US data and Trump's election victory, market expectations for Federal Reserve rate cuts have weakened, and the recent strength of the dollar has reached "historical extremes". The dollar should remain strong in the first half of 2025. However, due to Trump's policies (including trade tariffs) "affecting the US economy while other countries respond", the dollar may weaken in the second half.