Survey: Investors anticipate the US dollar will strengthen in the short term, but may face pressure in the long term

A recent survey by an institution shows that the dollar will stabilize at the beginning of 2025, and then face risks such as accelerated US inflation and a surge in fiscal deficits in the next year. As we enter next year, 89 respondents have different views on the risk that may cause the most damage to the dollar.

The largest proportion of concerns about deficits is 38%, and another 32% of respondents believe that if Trump implements tariff measures promised during his campaign after taking office in January, then weak growth in US and global economies next year will put pressure on the dollar. Although these policies may strengthen the dollar in short term, they would ultimately suppress its appeal due to long-term economic impact.

Nevertheless, approximately 70% of respondents still believe that Dollar Index will rise within next month. There are two key themes supporting people's confidence in dollars before end of this year: one is U.S. bond yields will be supported by Federal Reserve's patience for interest rate cuts which promotes investors' inflow into U.S assets; secondly is safe-haven buying for dollars possibly caused by series uncertainties surrounding Trump's future economic policies.