DBS cites Fed reluctance to hike, US-Japan currency interventions, and easing Middle East tensions as key drivers for USD weakness.
The US Dollar is poised for continued weakness in August after a sharp late-July decline. A Federal Reserve perceived as hesitant to raise rates, alongside coordinated US-Japan currency interventions in USD/JPY, has undermined investor confidence in the greenback’s trajectory.
Investors had bet on Fed Chair Kevin Warsh’s hawkish stance, but the July FOMC meeting focused on institutional reforms rather than rate hikes. The shift led to a steepening US Treasury yield curve, signaling fading confidence in US monetary policy. A cooling geopolitical backdrop in the Middle East further reduces USD support.
The combination of these factors suggests sustained pressure on the Dollar in the near term.