US Dollar Index: Upside case from flows and yields – BBH

Brown Brothers Harriman’s Elias Haddad notes that foreign investors sharply increased purchases of long-term US securities in April, with inflows over the past year more than offsetting the US trade deficit. He highlights that US-G6 yield differentials and US economic outperformance support the Dollar, suggesting the DXY can trade higher from current levels.

Yield spreads and inflows back Dollar

"Still, the dollar index (DXY) can edge higher. US-G6 two-year bond yields are consistent with DXY trading closer to 102.00 and US economic outperformance should keep rate differentials supportive of the dollar."

"Moreover, underlying demand for USD remains strong. The US Treasury International Capital (TIC) data showed net foreign purchases of long-term US securities (treasury bonds & notes, corporate bonds, equities, gov’t agency bonds) increased by $206bn in April (the most since November 2025) vs. $96bn in March."

"As a result, in the twelve months to April, foreign investors accumulated a record $1825bn of long-term US securities, eclipsing the -$719bn accumulated US trade deficit over the same period."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)