The DXY index finished June more than 2% stronger, helped by a shift in market focus. War in the Middle East continues to recede as a theme; in its place, growth conditions, fiscal risks, and especially monetary policy, have returned as primary FX drivers. For the time being, that mix has proven to be dollar-positive, pushing the DXY to its strongest levels since May 2025.
But looking ahead, we see building headwinds, with increasing odds that recent dollar highs might prove to be a peak for the buck as we head into the second half of the year.
Authors:
Nick Rees, Head of Macro Research
Barry van der Laan, Senior FX Market Strategist
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