Dollar Strength Wears Thin Amid Rising Risks and Uncertainty
The US dollar has maintained its strength in 2026, but currency strategists are warning that risks are building. The Dollar Index, which measures the greenback against six major currencies, is up about 1.15% this year after reaching a 52-week high of 101.80 on June 24.
Higher Treasury yields have supported the dollar by making US assets more attractive to investors. However, currency strategists say the reason for rising yields is becoming increasingly important.
Charu Chanana, chief investment strategist at Saxo, notes that a higher yield generated by stronger economic fundamentals is not equivalent to a higher yield generated by a larger risk premium.
The distinction has become more relevant after a global bond sell-off pushed the 30-year Treasury yield to its highest level since 2007 this week. The recent US economic reports have also affected the dollar outlook, with softer readings on consumer spending, inflation, and employment leading markets to reassess expectations for Federal Reserve interest rates.