---
title: "Bank of America Tells Clients to Stay Long the Dollar Into the Third Quarter"
description: "Bank of America is advising clients to keep betting on a stronger U.S. dollar against the euro through the third quarter, arguing that expected Federal Reserve rate hikes and a resilient American economy will keep the currency well supported — a call worth weighing against the seasonal risks the bank itself flags."
category: "Markets"
category_url: https://boursel.com/category/markets
author: "Marcus Feldman"
published: 2026-06-28T08:43:00.000Z
updated: 2026-06-28T08:43:00.000Z
canonical: https://boursel.com/article/bank-of-america-tells-clients-to-stay-long-the-dollar-into-the-third-quarter
tags: ["us-dollar", "forex", "bank-of-america", "federal-reserve", "euro"]
---
# Bank of America Tells Clients to Stay Long the Dollar Into the Third Quarter

Bank of America is advising clients to keep betting on a stronger U.S. dollar against the euro through the third quarter, arguing that expected Federal Reserve rate hikes and a resilient American economy will keep the currency well supported — a call worth weighing against the seasonal risks the bank itself flags.

This is attributed analysis, not investment advice.

Bank of America is sticking with a bullish view on the U.S. dollar. The bank's strategists [reaffirmed a recommendation to "stay long the dollar and short the euro"](https://www.investing.com/news/economy-news/bofa-says-investors-should-stay-long-usd-into-q3-4764071) heading into the third quarter, betting that the gap between U.S. and European interest rates will keep working in the greenback's favor.

## What "long the dollar" means

To be **long** an asset is simply to own it (or a position that profits if it rises) — so "long the dollar, short the euro" is a bet that the dollar gains on the euro. Big investors express this through currency forwards and futures, options, or dollar-denominated assets. The single most important driver of such moves is the **interest-rate differential**: money tends to flow toward the currency that pays more, so when one central bank is expected to keep rates higher than another's, that currency usually firms.

## BofA's reasoning

The bank's case rests on rates and growth. Its strategists "expect three Fed rate hikes this year," which they argue would **widen interest-rate differentials in favor of the greenback**, per Investing.com. They also point to "resilient U.S. economic growth" and a narrowing gap between American economic performance and the rest of the world, with AI-related investment expected to remain "an important economic driver." Higher U.S. rates and stronger relative growth both pull capital toward dollars.

That translates into concrete targets. BofA sees **EUR/USD at 1.12 in the third quarter** — i.e. a weaker euro — before drifting back to 1.15 by year-end, alongside forecasts of around 1.37 for sterling (GBP/USD) and 152 on the dollar against the Japanese yen (USD/JPY).

## The caveats the bank itself flags

This is not an unqualified bull call. BofA warns that **seasonal patterns turn less supportive in August**, when foreign-exchange volatility typically rises — a reason it frames the trade as one to hold "into" Q3 rather than indefinitely. A Fed that hikes less than expected, or clearer evidence of a U.S. slowdown, would undercut the thesis, since the whole argument hinges on the U.S. keeping its rate advantage.

## Why a strong dollar matters beyond traders

The dollar is the world's reserve currency and the unit in which much of global trade and debt is priced, so its direction ripples widely. A stronger dollar tends to **pressure emerging markets**, many of which borrow in dollars and find that debt harder to service as it climbs. It weighs on **dollar-priced commodities** like oil and metals, making them costlier for buyers using other currencies. And it can **dent the overseas earnings of U.S. multinationals**, whose foreign revenue converts into fewer dollars. A call on the dollar, in other words, is really a call on conditions across global markets — which is why a single FX recommendation from a big bank is worth understanding, not as advice, but as one well-argued view among many.

## Sources

- [BofA says investors should stay long USD into Q3](https://www.investing.com/news/economy-news/bofa-says-investors-should-stay-long-usd-into-q3-4764071)