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US Dollar Forecasts 2021

Forecasts for the US dollar change all the time, affected by news events and relative sentiment towards the US economy. This continually updated article reviews the latest forecasts from banks and FX experts as well as news and recent movements of USD in the currency markets.

 

USD in the markets

Rabobank told Bloomberg News that they see the US Dollar strengthening against many currencies this year as inflation picks up maybe leading to higher interest rates in the US, the so called ‘reflation’ trade.

So far this year however, most banks and forecasters expect the down trend for USD to continue, along with an increase in volatility, with some predictions of a 20 per cent or more fall for the greenback in 2021.

With so many coronavirus associated risks still around, it’s expected the US dollar will have occasional up-ticks as a safe-haven, but the overall trend for 2021 is expected to be down as international economies improve which will weigh on the greenback.

The US dollar has dropped steadily in the last quarter against nearly all major currencies. In mid December the US Dollar fell to a nearly three year low with the US Dollar Index hitting its lowest value and falling below 90 for the first time since January 2018.

Optimism around a $908 billion stimulus package and positive vaccine headlines are boosting risk sentiment, prompting investment in equities and taking money away from the USD. The ongoing COVID-19 surge is also weakening consumer demand.

Negotiations continue for a fiscal stimulus deal to support the US economy, but if negotiations fail before Biden’s inauguration, there could be a bounce. Likewise, should the incoming Biden administration make any announcements around corporate regulation, this could trigger a move away from equities and cause some appreciation of the USD in the short term.

The US dollar held its value in 2019 despite the US-China trade tensions, mainly because the greenback is still considered a safer currency to own than most others.

You can also read our full Foreign Exchange Guide to the United states.

What is a good US Dollar exchange rate?

Whether the US dollar will rise or drop in the future is a difficult question and the answer really depends on many factors. The best way to consider an exchange rate’s current relative value is to look at the US dollar’s history against a range of currencies and in particular against the currency you are interested in exchanging.

 

 

The following sections show a summary of trends and forecasts for popular US dollar exchange rates.

USD to EUR

Swiss bank UBS see the EUR/USD rate to rise near 1.27 (USD/EUR below 0.78) by the end of 2021 as the world recovers from the pandemic and has less need for USD as a safe haven. USD-EUR Forecasts


 
USDEUR at 0.8346 is near its 90-day average, 0.8214-0.8534 range.
30DLOW
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USD to AUD

OFX predict that if AUD/USD can’t break the 0.80 level again (USD/AUD 1.25) then this could see investor demand for the antipodean currency waiver. AUD-USD Forecasts


 
USDAUD at 1.2922 is just below its 90-day average, 1.2538-1.3189 range.
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Alert:4D-1.5% |

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USD to CAD

If risk sentiment continues to improve, the CAD is well placed to extend recent gains. In the longer term, there is a perception Canada will enjoy a renewed close trade relationship with the US, with Biden as US President. USD-CAD Forecasts


 
USDCAD at 1.2509 has fallen 1.0% below its 90-day average, 1.2407-1.2849 range.
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Alert:14DLOW |

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USD to GBP

ING predict GBP/USD should breach 1.50 this year. While risks remain in place (the negative headline news around the Scottish independence referendum; the ongoing risk of tariffs should UK government choose to deviate from EU labour laws) GBP-USD Forecasts


 
USDGBP at 0.7230 is near its 90-day average, 0.7069-0.7369 range.
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USD to MXN

The peso has regained strength against the US dollar that it lost mid-February. Into April the peso has increased in value with USDMXN back below 20 and well below its 90-DAY average. USD-MXN Forecasts


 
USDMXN at 19.92 has fallen 2.3% below its 90-day average, 19.59-21.50 range.
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USD to INR

The RBI’s QE announcement ended the Indian rupee’s good run versus the U.S. dollar sending it back below 74 to the greenback. USD-INR Forecasts


 
USDINR at 74.56 has risen 2.0% above its 90-day average, 72.29-75.18 range.
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USD to JPY

SEB Group see the USD/JPY rate at 110 by the end of 2021. USD-JPY Forecasts


 
USDJPY at 108.8 has risen 1.5% above its 90-day average, 103.5-110.7 range.
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USD to SGD


 

USDSGD at 1.3344 is near its 90-day average, 1.3188-1.3503 range.
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Alert:30DLOW |

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Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.