Six Years of Pain Ahead for Dollar: HSBC

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The U.S. looks set to win the currency war, according to HSBC, which forecasts the dollar will remain weak for the next seven years.

(Read More: Currency Wars Return, 1930s Style)

In a report on foreign exchange published on Thursday afternoon, HSBC said downward pressure on the dollar is here for the long-term, as the U.S. continues a prolonged struggle with its fiscal deficit.

"Once U.S. economic recovery is better established, we would expect the dollar to move back towards long term fair values," wrote the HSBC analysts, led by David Bloom, global head of foreign exchange research.

However, Bloom forecast that in 2015, the dollar will still trade at around 1.35 euros, before weakening to 1.25 euros in 2017 and remaining at the level until 2019.

"We see the euro remaining relatively strong, as the sovereign debt problems are gradually addressed," said Bloom.

As of Friday, the dollar traded at 1.34 euros. The euro reached a 14-month peak against the dollar and a 30-month high against the yen last week.

Bloom added: "We expect the yen to remain relatively strong longer term for structural reasons, but expect the Swiss franc to unwind some if its extreme overvaluation."

The dollar traded at 92.31 on Friday. HSBC forecast the dollar will fall to 75 yen by 2015, before rising to 90 yen in 2019.

In recent months, critics have accused both the Federal Reserve and the Bank of Japan of intentionally weakening their currencies through loose monetary policy.

-By CNBC's Katy Barnato