Report published August 27, 2026
Bank of America FX Strategy: Fiscal Dominance, Fiat Competition, and Global Currency Outlook
Source and citation context
- Issuer
- Bank of America
- Report date
- August 27, 2026
- Analysis as of
- Not stated in source
Authors / editors: Oliver Levingston (FX and Rates Strategist), Raghav Adlakha (EM Quant/Sovereign Strategist), Mark Cabana (Rates Strategist)
Finvaulta summarizes Bank of America's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
Fiscal dominance and debasement are global challenges affecting major DM economies, not just the US, keeping DXY supported against peers like EUR, JPY, and GBP. Investors should selectively express bearish USD views through high-beta FX (long NZD/USD), gold proxies (short USD/PEN), and positive EM carry (short EUR/BRL).
Key Takeaways
- 1.Fiscal dominance and debasement concerns are global rather than uniquely US phenomena, with upcoming fiscal risks in France, Japan, and the UK supporting DXY.
- 2.Selective USD selling is recommended via high-beta FX (NZD), EM gold proxies (PEN), and high-carry EM FX (BRL).
- 3.EMFX is increasingly trading as a proxy for gold rather than solely responding to DXY, benefiting metals exporters and high-carry currencies.
Table of Contents
- Key takeaways
- Fiscal dominance, not dollar debasement
- G3 FX: Safety in numbers
- Trip hazards in the Fall
- Falling fiscal r-stars in US, Japan, UK and France
- EMFX: more long gold than short DXY
- Trade recommendations
- Notable Rates and FX Research
- Rates, FX & EM trades for 2026
- Analyst Certification
Report data
Exhibit 4: Among the US, UK, France and Japan, only the BoE can run above-neutral rates without risking either higher debt levels or increased inflation
| Metric | Estimate | Context |
|---|---|---|
| NZD/USD Trade Target | 0.62 | Target level for long NZD/USD recommendation with entry at 59.57 and stop at 0.58. |
| USD/PEN Trade Target | 3.20 | Target level for short USD/PEN recommendation with entry at 3.37 and stop at 3.50. |
| EUR/BRL Trade Target | 5.5 | Target level for short EUR/BRL trade recommendation with entry at 5.8 and stop at 6.1. |
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Authors / Editors
Reported Data Context
- NZD/USD Trade Target: 0.62 (2026) · Source: BofA Global Research
- USD/PEN Trade Target: 3.20 (2026) · Source: BofA Global Research
- EUR/BRL Trade Target: 5.5 (2026) · Source: BofA Global Research
Securities
Themes
Regions
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