The bull and bear markets of the US dollar since the 1970s

Since the early 1970s, following the collapse of the Bretton Woods system, the US dollar has experienced multiple bull and bear markets, with turning points related to significant events. The bear market of the dollar ended in the late 1970s, reaching a bull market peak in 1985. After the Federal Reserve raised interest rates in 1994, the bear market bottomed out, and a new bull market began due to economic growth and stock market performance. The dollar entered a bear market starting in 2000, which lasted until the end of the European debt crisis in 2010. Recently, the dollar bull market has ended, and Deutsche Bank predicts future exchange rate changes

Since the early 1970s, when the Bretton Woods system collapsed, the US dollar has experienced several bull and bear markets, with turning points often coinciding with significant events.

At the end of the 1970s, the bear market for the dollar ended with the intervention of the Federal Reserve led by Paul Volcker, and the Plaza Accord of 1985 marked the peak of this bull market.
This was followed by a long bear market, which only bottomed out with the Federal Reserve's aggressive interest rate hikes from 1994 to 1995.
Benefiting from US economic growth and strong stock market performance, as well as the Asian crisis at the end of the 1990s, this bull market for the dollar continued until interest rates were significantly lowered after the burst of the internet bubble.
A new bear market for the dollar began in 2000 and lasted until around 2010 when the eurozone debt crisis ended the bear market.
Subsequently, the dollar entered the longest bull market in history, which only ended in recent weeks.

Deutsche Bank stated that it is not difficult to see what has changed with the dollar in recent weeks. Significant events behind this include the largest trade policy shift in a century, possibly the largest fiscal stimulus in Germany since World War II, and a dramatic change in the international perception of the attractiveness of investing in the US.

Deutsche Bank believes that the US's twin deficits have existed for a long time, but the "American exceptionalism" has allowed these deficits to be easily financed. As "American exceptionalism" erodes, future financing may become more difficult without a depreciation of the dollar.

Deutsche Bank's forex strategists now predict that by the end of 2027, the euro/dollar exchange rate will be close to 1.30, the yen will reach 114 against the dollar, and the pound will reach 1.45 against the dollar.