2020 US Dollar Forecast

Forecasts for the US dollar vary from bank to bank and from month to month. This article looks at the general trend in the US dollar forecast and how it might impact your home currency.

2020 US dollar USD Forecast

The US dollar (USD) is retreating from recent high levels (the highest levels in over 2 years). However, most banks expect the US dollar to end the year strong relative to other currencies.

Most bank forecasts show the USD will likely weaken in 2020, however, the extent and speed in forecasts differ widely. This is because there are a lot of influences impacting the US dollar.

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Updated in November 2019

2020 US dollar USD forecast Image of Golden Gate Bridge

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US Dollar forecast in 2019

Most bank forecasts show the USD has been surprisingly strong in 2019. Banks have frequently had to adjust US currency pairs (USD against other exchange rates) to reflect this USD trend.

 

Will the USD get stronger in 2020?

Maybe slightly, if we agree with most of the major banks.

Let's examine the 4 most likely reasons the US dollar will remain strong at current forecast levels:

  • The US economy picks up, US political risks ease, and the Federal Reserve (central bank) increases interest rates, supporting the USD
  • Economic growth in non-US countries slow down and inflation only slowly and gradually picks up, increasing the chance of interest rate cuts outside of the US
  • China’s economic growth slows more than expected, reducing China trade and lowering demand for US imports

How does a weaker USD affect me?

The US economy is the biggest economy in the world. This is why events in the US significantly influences all other currencies.

Usually, when the USD goes up, your home currency gets weaker. When the USD falls, your home currency gets stronger. However, this isn’t always the case.

For example, in 2018, the USD got stronger, which means the Australian Dollar fell significantly throughout the year. There were other reasons why this happened.

If you want to see why the Australian dollar fell or what will happen to your home currency next year, check out our guides for 2020 currency forecasts.

AUD/USD Performance in 2018

What are the key influences on the US dollar?

1. US Economy

When the US economy gets stronger the US dollar improves. Right now the US economy is growing, which means consumer spending, employment rates and house prices are all improving.

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2. Politics

US politics currently has a big influence on the US dollar. Some believe President Donald Trump will be unable to deliver on his pre-election promises. Greater uncertainty from politics means investors will sell the US dollar, because there is a greater chance of it getting weaker.

3. Imports and Exports

The US is world’s largest importer and is the world’s second largest exporter (second to China). When imports are greater than exports the US dollar rises, because it signals a more prosperous economy. Negatively, the US and China have been engaged in a trade war since April 2018. This can make the US dollar volatile relative to other currencies.

US Dollar bank forecast currency pairs

Major banks agree the Aussie will strengthen in 2020. Most analysts are expecting the AUDUSD to move towards 70 cents, from 65 cents at the end of 2019.

Major banks agree the Euro will trend higher in 2020. Most bank analysts are expecting the EURUSD currency pair to gradually rise towards 1.1500.

Banks are expecting the Pound Sterling to strengthen in 2020, as Britain actively manages its exit (Brexit) from the Eurozone.

Bank analysts agree the New Zealand Dollar will continue to come under pressure next year. Most banks are expecting the NZDUSD will fall from current weak levels towards 0.5000.

In 2019, the Japanese Yen has been weaker than the banks anticipated. However, most banks agree the USDJPY will weaken even further by the end of 2020.

Where to find the best USD cash rate

In Australia, the best cash rates are found in major cities. We regularly check the main money changers in each CBD to find out the best forex exchange rates for US dollars in town.

How to track down the best cash rate

You can either walk around to each money changer, try and call each one and check their rate or you can use our city and suburb guides:

Compare international money transfer exchange rates

General advice: The information on this site is of a general nature only. It does not take your specific needs or circumstances into consideration. You should look at your own personal situation and requirements before making any financial decisions.