A week after Donald Trump won the US presidential election, the momentum of the US dollar is increasing, sweeping other currencies aside, prompting Wall Street strategists to prepare for further increases.

The Bloomberg US Dollar Index rose to its highest level since November 2022 on Tuesday, pushing the euro to its lowest level in a year, while other currencies were also under pressure. The yen and the Canadian dollar also fell, heading towards key psychological levels.

"We believe that the strong momentum of the US dollar will continue until next year, even until 2026," said Helen Given, a Forex trader at Monex. "The Trump administration has substantially changed the calculation of forecasts, as domestic policies point to a spree of massive spending, while international policies may be quite protectionist."

Since Trump's reelection, with the prospect of the Republicans sweeping both houses of Congress, all the strategists on Wall Street have unanimously positioned themselves to be bullish on the US dollar. According to recent strategy reports, JPMorgan, Goldman Sachs, and Citigroup all expect the US dollar to rise further from its current levels.

"The election results have magnified the US dollar's exceptionalism," wrote Meera Chandan and others, JPMorgan strategists. "No other currency possesses the qualities that the US dollar has - superior growth in the stock market, higher yields, and defensiveness."

JPMorgan stated that even without a formal declaration of trade barriers, the market sentiment surrounding Trump's victory is enough to bolster the US dollar. Although the timing of Trump's policies remains unclear, which makes it unlikely for the US dollar to move in a straight line, Chandan expects the US dollar index to rise by as much as 7% in the coming months. This will drive the euro towards parity with the US dollar and push the Chinese yuan against the US dollar towards 7.40.

Goldman Sachs strategist Kamakshya Trivedi and others believe that policy recommendations will boost the US dollar. The extent to which the US dollar will continue to rise may vary depending on the response measures of other countries.

Strategists from Barclays and Brown Brothers Harriman & Co. similarly believe that there is little to stop the continued rise of the US dollar. They think that apart from Trump's policy agenda, the economic momentum is also turning bullish for the US dollar. Following officials' avoidance of providing clear guidance on the timing and pace of further rate cuts, traders have reduced bets on the extent of Fed rate cuts.

Recommended Read: Will the euro fall to parity with the US dollar? Deutsche Bank believes it may go even lower.

On Tuesday, the euro fell by 0.5% against the US dollar to 1.0596, the lowest in a year. Meanwhile, the yen dropped by 0.7% to 154.8 yen per US dollar, slightly below the psychological level of 155 yen per US dollar. The Canadian dollar fell for the third day against the US dollar, approaching a four-year low.

So far, the general decline in the forex market is bullish for the US dollar. Options trading and the latest position data indicate that traders are also betting on further appreciation of the US dollar, with bullish sentiment for the US dollar over the next year reaching its highest level since early July.