State Street strategists warned the US dollar could fall as much as 10% this year if the Federal Reserve eases monetary policy more aggressively than markets currently anticipate.
Speaking in Miami, strategist Lee Ferridge said:
“Two rate cuts remain a reasonable base case”
But cautioned that “Three is possible,” highlighting risks skewed toward further easing.
Ferridge argued that additional cuts would loosen financial conditions, reduce the appeal of dollar-denominated assets and increase currency hedging by overseas investors, amplifying downward pressure on the greenback.
Speculation over a potential leadership shift at the Federal Reserve has added to uncertainty, with Kevin Warsh, US President Donald Trump’s reported pick to succeed Jerome Powell, widely seen as favouring a faster pace of rate reductions.
Markets are currently pricing in two cuts this year, according to CME Group’s FedWatch Tool, with the first expected in June as the central bank maintains its target range of 3.50%–3.75%.
A weaker dollar has historically coincided with stronger demand for risk assets including Bitcoin, as softer currency conditions can boost global liquidity and push investors toward alternatives to fiat money.
However, analysts note the inverse relationship between the US Dollar Index and Bitcoin is inconsistent, with profit-taking, positioning and broader risk sentiment often diluting the impact of currency moves.
At the time of reporting, Bitcoin price was $67,556.54.