A sustained recovery in the U.S. dollar remains unlikely for now, according to FX research at HSBC.
- for sentiment to shift meaningfully, the dollar would need to reassert its positive response to the U.S. yield advantage — both nominal and real — over other major currencies.
- however, that relationship has broken down in 2025, with the DXY dollar index no longer tracking rate differentials as closely as in the past
HSBC suggest that other forces are now driving the dollar’s underperformance, including elevated U.S. policy uncertainty, as well as structural factors such as investor hedging against dollar volatility and ongoing current account pressures.
This article was written by Eamonn Sheridan at www.forexlive.com.
