Many analysts on Wall Street warn: If Trump takes office, the US dollar will strengthen!

Wall Street strategists say that despite recent statements by Republican Trump indicating a preference for a weaker dollar, if he is re-elected as president, the dollar is actually expected to strengthen.

Deutsche Bank pointed out in a report that artificially devaluing the dollar would be "very difficult" as it would require spending trillions of dollars on intervention or implementing policies to encourage massive outflow of U.S. capital. Morgan Stanley insists that Trump's proposed policies would push up the dollar, while Barclays advises clients to take advantage of the recent weakness in the dollar to go long on the dollar.

These strategists made their predictions after Trump's recent remarks, where he stated that the strong dollar has harmed U.S. competitiveness, a view he has held throughout his first presidential term, leading to pressure on the dollar. The dollar index has fallen 1.6% since hitting an 8-month high in late June.

Deutsche Bank strategists wrote in a report:

"Tariff policies and their strong impact on the dollar are more likely to dominate the market than policies aimed at devaluing the dollar."

On Monday, the dollar index fell slightly as traders weighed the impact of Biden's withdrawal from the presidential race, but the index has still risen over 3% so far this year.

Thierry Wizman, global foreign exchange and interest rate strategist at Macquarie, stated that having Harris as the potential Democratic nominee is "unlikely to bring significantly better performance against Trump in November."

Wizman wrote in a report on Monday, "Therefore, at present, Trump's chances against Harris seem more or less the same as against Biden, although the situation may change. If Trump returns to the White House, U.S. bond yields will be higher under his leadership than under Harris, and the dollar may strengthen. This view comes from the prospect that Trump 2.0 will lead to higher inflation due to restricted immigration, higher tariffs, and the extension of the Tax Cuts and Jobs Act of 2025."

Barclays stated that other long-term driving factors, such as slowing global economic growth, will continue to support the dollar. Barclays strategists, including Themistoklis Fiotakis, wrote in a report, "Even when considered alone, tariff risks are enough to support a dollar rebound."

James Lord, a strategist at Morgan Stanley, stated that the debate around the outlook for the dollar has intensified following Trump's recent comments on a weaker dollar, but he still believes that tariffs will lead to a stronger dollar. Especially if retaliatory measures from trading partners increase global economic risks.

Lord wrote in a report on Monday, "We believe investors generally agree with our view that the dollar could rise due to the implementation of trade tariffs."

"While Trump could also try to weaken the dollar by limiting the Fed's independence, considering the dollar's special status and the government's checks and balances, this approach is highly challenging." TS Lombard's Managing Director Dario Perkins said, "While undermining the credibility of the Federal Reserve is a good start, the US government faces greater challenges in devaluing its currency than other governments. The US dollar is the world's reserve currency, which fundamentally creates structural buying pressure on the dollar."