Bank of America: USD May End Its Downtrend After Upbeat Jobs Data

The US dollar is signaling a bearish reversal after stronger-than-expected US employment data, according to a new analysis from Bank of America (BofA).

The USD has been weakening in recent weeks as geopolitical factors have eased, especially after tensions with Iran eased. In the foreign exchange market, factors such as Momentum have overshadowed Interest Rate Differentials and Valuations, putting pressure on the greenback.

However, Bank of America stressed that the USD's decline may have bottomed out, after key US employment indicators showed the economy still had momentum. This is reflected in the Macro Employment factor in the bank's quantitative analysis framework.

🔁 Signs of a broad USD trend reversal
In the report titled “FX Quant Insight: USD Trend Reversals” released on July 7, 2025, BofA stated that the risk of a USD trend reversal is clearly increasing.

In particular, the greenback has the most obvious recovery potential compared to:

Euro (EUR)

Canadian Dollar (CAD)
→ among G10 developed countries

and

Colombian Peso (COP)

Polish Zloty (PLN)

Hungarian Forint (HUF)
→ among emerging markets (EM).

📊 Market View and Investment Impact
According to BofA, this recovery is not only technical, but also based on fundamental factors, such as the resilience of the US labor market and the possibility that the Federal Reserve (Fed) may maintain a more hawkish stance than expected.

Signal of USD trend reversal may affect:

Short-term forex investment strategy

Bond yield expectations

Price trends of USD-denominated commodities such as gold, crude oil

For investors, this could be an opportunity to rebalance their FX portfolios, especially as a rebound in the USD could put pressure on risk assets and emerging markets.

🔮 Summary
Strong US labor data is opening up the possibility of a reversal in the long-term weakening trend of the USD. With quantitative analysis from Bank of America suggesting that a correction may have begun, investors should pay special attention to major currency pairs and emerging markets that are directly affected by the greenback's movements.