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Figure Heloc DBS Group Research economist Philip Weeargues that although risk aversion from the Iran conflict usually supports the Dollar, this time the USD’s haven appeal may prove short-lived. He points to a Fed pause versus G10 rate hikes and pressure on US Treasuries from rising fiscal concerns.
💡 DMK Insight
The USD’s haven appeal might be fading, and here’s why that matters: With the Iran conflict escalating, one would expect the Dollar to strengthen as traders seek safety. However, Philip Weeargues from DBS Group Research suggests this time could be different. The Federal Reserve’s decision to pause interest rate hikes contrasts sharply with the G10’s tightening cycle, creating a unique dynamic. As the Fed maintains a dovish stance, US Treasuries could face downward pressure, which might weaken the Dollar’s attractiveness as a safe haven. Traders should keep an eye on the correlation between USD and US Treasury yields. If yields continue to rise due to fiscal concerns, it could lead to a stronger Dollar in the short term, but the long-term outlook may be bearish if the Fed remains on hold. Watch for key levels in USD pairs, especially against G10 currencies, as any signs of a reversal could signal a shift in sentiment. The next few weeks will be crucial as we assess how geopolitical tensions and monetary policy interplay.
📮 Takeaway
Monitor USD pairs closely; a sustained weakness could emerge if US Treasuries face pressure amid Fed pauses and G10 rate hikes.
