The global economy is in the midst of a seismic shift. Aggressive and confrontational U.S. policies may be triggering a paradigm reset—possibly even a full-blown regime change. Markets have already moved at lightning speed, hitting levels in days that we expected would take quarters. Much of this seems driven by rapid unwinding of USD positions and repatriation out of US assets. But with geopolitical tensions and tariffs still in flux, the landscape remains unpredictable and calls for scenario-based thinking over rigid forecasts.
Short-term consolidation and a repricing for a less dovish Fed are possible. But the deeper damage is done: doubts over the USD’s dominance and Treasuries’ safe-haven status are no longer fringe views—they’re gaining real traction. Even without a clear alternative, the case for long-term diversification away from the dollar is building. In other words, the USD smile is broken, and the probability of a new global monetary paradigm is rising.
For our latest FX views, drivers and forecasts for the USD, EUR, and the rest of G10 FX, LatAm FX, CNY and TRY see our FX Insights.