US Dollar Index: Rally questioned as safe-haven role tested – Rabobank
Rabobank’s Senior FX Strategist Jane Foley notes the US Dollar (USD) has been the weakest G10 currency over the past week, with US Dollar Index (DXY) down about 2% from late July.
The US Dollar (USD) has been the weakest G10 currency over the past week, according to Rabobank’s Senior FX Strategist Jane Foley. The US Dollar Index (DXY) has declined about 2% from late July, raising concerns about the USD's safe-haven status and reserve-currency privilege. The decline in USD sentiment is attributed to the Middle East and Iran conflicts, Trump’s tariffs and rate-cut rhetoric, and expectations from the Federal Reserve.
The recent declines revive questions about the USD rally, which has been ongoing during the Middle East crisis. These concerns echo the sharp losses in the USD value last spring and the sour tone that surrounded the greenback at the start of the Iran war in late February. In April 2025, both USD and US treasuries lost their footing following Trump's announcement of tariffs, undermining confidence in the USD as a safe haven.
This debate about the USD's role as the prime reserve currency and its place in international payments systems, along with the pace of de-dollarization, has intensified. Since May, the USD has found support from Fed rate hike speculation, but its recent decline has revived fears of a return to last year's negative sentiment. Additionally, safe-haven USD buying may have been affected by Trump's announcement of pausing further attacks on Iran in hopes of a diplomatic solution.
Despite these concerns, the short-term outlook for the USD may still be supported by relatively good US economic data.
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