USD: Policy risks erode premium – DBS

DBS Group Research’s Philip Wee revises US Dollar forecasts lower versus most major and Asian currencies, citing rising uncertainty around Federal Reserve leadership, de‑dollarization trends and US political risks into the November midterm elections. He argues the Dollar has lost support from rate differentials and US economic exceptionalism, with institutional credibility and politics now driving performance. DBS expects two Fed cuts in 2H26.

Fed cuts, politics and de-dollarization weigh

"We have revised our USD forecasts lower against most major and Asian currencies, reflecting rising policy uncertainty around Fed leadership and independence, growing de-dollarization dynamics, and increasing political uncertainty ahead of the November US midterm elections."

"The greenback is no longer enjoying the support it once received from interest rate differentials and US economic exceptionalism."

"Instead, institutional credibility and political risks are becoming dominant drivers of currency performance."

"We see two Fed cuts in the second half of this year."

"De-dollarization will continue."

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