A series of persistent shocks, from energy price spikes and tariffs to AI-driven demand, continues to challenge the return of inflation to target, reinforcing a more hawkish stance among global central banks. At the same time, elections and growing concerns over fiscal sustainability are putting upward pressure on bond yields, adding to an increasingly complex backdrop for FX markets. With geopolitical tensions and structural shifts raising questions about what a return to ‘normal’ might look like, the USD continues to stand out as both a safe haven and a currency of opportunity. Supported by higher real rates, US leadership in energy and technology, and the vulnerabilities of other major currencies, the dollar remains well positioned to benefit from both defensive flows and investment opportunities, even as longer-term uncertainties persist.
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 latest FX Insights.