The U.S. dollar is currently enjoying a three-week winning streak and is set for its biggest October gain in over ten years. However, analysts at Bank of America (BofA) believe this upward momentum is likely to fade soon.

“We believe the USD rally is losing strength, and we have started to scale back,” BofA analysts stated in a report on Monday.

The dollar index, which tracks the greenback’s performance against a basket of six major currencies, has risen by about 2.5% in October. This positions the dollar for its best monthly performance since September 2022 and its strongest October gains in over a decade, according to BofA.

The dollar’s recent rise has been fueled by several factors: rising U.S. yields, safe haven demand due to global geopolitical tensions, and a resilient U.S. economy. However, BofA analysts expect these factors to weaken in the near future, which could end the dollar’s bullish run.

“The USD has benefited from higher U.S. yields, safe haven flows, and relative strength in the U.S. economy, but we believe these drivers are starting to wane,” the report added.

Despite this broader outlook, BofA warns that not all currency pairs involving the dollar will see a decline. Selecting the right currency pair to trade against the dollar remains critical, as some bullish signals for the greenback still persist.

“For this week, we are holding a bearish stance on USDCAD due to our out of consensus prediction of a 25 basis point rate cut by the Bank of Canada (BoC),” the analysts mentioned. They estimate the fair value of USDCAD to hover around 1.36, with dollar bulls likely to face challenges if the predicted rate cut materializes.

The euro, on the other hand, is expected to benefit from the dollar’s weakness, boosted by a strengthening Eurozone economy and a relatively hawkish stance from the European Central Bank (ECB). BofA forecasts the euro to rise against the dollar, potentially reaching $1.15 by the end of 2025.