Wells Fargo Bearish on US Dollar As Standard Chartered Says USD Decline Signals Concern on America’s Long-Term Fiscal Path

Two banking giants are sounding the alarm on the US dollar.

In a survey conducted by Reuters between April 30th and May 6th, about 55% of foreign exchange strategists who answered an additional question expressed concern about the US dollar serving as a hedge in times of economic uncertainty.

Wells Fargo macro strategist Erik Nelson sees the dollar depreciating in the coming months, predicting that the US economy will soon show signs of slowing down.

“We’re more bearish on the dollar in the second half of the year. More realization of weak US hard data, the Fed starting to actually cut rates as markets are pricing, some of the rotation out of US assets and concerns around Fed independence will likely come back into view.”

At the same time, Standard Chartered’s head of global G10 FX Research, Steve Englander, says he’s “very concerned” about the dollar’s standing as a safe-haven asset. Englander highlights America’s deteriorating balance sheet, noting that investors are cautious of holding US assets as the government continues to print large budget deficits.

“It’s like a betrayal of confidence from a friend. You can argue it didn’t matter, or that you didn’t mean it, but your friend still remembers it. That’s where the dollar currently is with respect to international confidence.

If you’d asked me this two months ago, I’d say what matters for the dollar in the first instance is the stimulus, and the funding – whether or not they’ve actually gotten revenues – would be secondary. Now it’s clear markets are much more concerned about the long-term fiscal path.”

Data from the Treasury Department shows that the US has spent $1.31 trillion more than it collected so far this fiscal year, which runs from October 1st, 2024, to September 30th, 2025. The figure represents a $242 billion increase compared to the deficit recorded during the same period last fiscal year.

Meanwhile, the US dollar index (DXY), which pits the USD against a basket of foreign currencies, is down over 7% since February.

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