Rising oil prices and Middle East tensions drive expectations for a 2-3% US Dollar appreciation in the second half of 2026.
OCBC analysts project the US Dollar will strengthen by 2-3% against lower-yielding currencies like the Euro, Japanese Yen, and Swiss Franc in the second half of 2026. The outlook is supported by renewed Middle East tensions and higher oil prices, which have also lifted global bond yields.
The forecast assumes Brent crude remains below USD100 per barrel, though a sharper spike or signs of US economic overheating could trigger a larger rally. Last quarter’s energy shock is seen as fading, but further price increases may bolster the USD.
Recent FOMC minutes reinforced a hawkish stance, with a shift to scenario-based policy outlooks noted as a key development. The firm remains constructive on the USD amid geopolitical and energy risks.