|

USD: Dominance questioned as rivals stay weak – Societe Generale

Societe Generale’s Kit Juckes discusses whether the US Dollar’s global dominance is under threat as global imbalances widen and IMF meetings highlight systemic risks. He notes that while the Dollar’s share of global activity should gradually decline as the US share of GDP falls, neither the Euro nor the Chinese yuan currently offers a credible alternative reserve currency.

Dollar supremacy faces slow structural erosion

"“Is the US Dollar’s pre-eminence under threat?” is a frequent question these days."

"As the US share of global GDP falls, it makes sense for the dollar’s share of FX transactions, FX reserves, denomination of bond and equity issuance to fall too, but there isn’t a viable competitor to threaten its position at the heart of the global financial system."

"Suffice to say that dollar dominance has been phenomenal compared to the dominance even of the pound in the 19th century."

"The Chinese yuan, with capital controls and policies which help it remain competitive, isn’t a candidate to replace the dollar, and the euro will only be a competitor when it is the currency of a far more unified economic bloc."

"Until then, the most likely outcome is for GBP to continue fading away and the JPY to do likewise."

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

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

GBP/USD clings to small gains near 1.3450 after UK jobs data

GBP/USD trades in positive territory at around 1.3450 in the European session on Tuesday. The UK ILO Unemployment Rate remained at 4.9% in the three months to May, compared with expectations of 5%, but failed to provide any impetus to the British Pound's renewed uptick. Traders stay cautious amid US-Iran uncertainty and the UK political transition.

EUR/USD keeps range above 1.1400 after German ZEW

EUR/USD is keeping its range above 1.1400 in Tuesday's European session, as the US Dollar (USD) retreats following Monday's rebound. Nevertheless, the uncertainty around the US-Iran conflict limits the pair's upside. Meanwhile, the Euro (EUR) pays little heed to the strong German sentiment data, as traders await Thursday's European Central Bank policy announcements, which could drive the Euro's near-term valuation.

Gold extends recovery toward $4,100

Gold gains traction following Monday's choppy action and advances toward $4,100 on Tuesday. However, the uncertainty surrounding the conflict in the Middle East and growing expectations for a hawkish Federal Reserve policy outlook could make it difficult for the precious metal to gather bullish momentum in the near term.

Bitcoin extends advance as ETF inflows, Iran war mediators' proposal lift risk mood

Bitcoin extends its gains, trading above $65,800 after closing above the key technical hurdle the previous day. The bullish price action is further supported by the return of institutional demand, with spot Exchange Traded Funds continuing their inflows on Monday. In addition, the renewed hopes for peace between the US and Iran have lifted risk sentiment, providing an additional tailwind for the Crypto King.

Buy the dip on the Dow Jones and S&P? Forex Trading Gold descending triangle

Trading during a war, a pandemic, during trade disputes, and other geopolitical events, especially when some major players are sociopathic, can be quite challenging. The Iran war is no exception. The Iran war is no exception.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?
The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.