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Dollar outlook supported by US yields, but DXY may fail above June peak
Brown Brothers Harriman says the DXY may struggle to hold above 101.80, even as US growth outperformance and foreign demand for US assets remain supportive.
Brown Brothers Harriman analyst Elias Haddad said the US dollar can keep benefiting from widening US to G6 rate differentials and higher US real yields, though central bank tightening elsewhere limits how much policy divergence can widen.
He cautioned that the DXY may struggle to sustain a break above its June 24 high at 101.80, pointing to the balance between ongoing dollar support and the restraint from other major central banks.
FXStreet notes the US-Iran standoff and US growth outperformance continue to underpin the dollar as a safe haven, while markets also weigh inflation risks tied to higher oil prices and rising expectations for an October Fed rate hike.
The article also highlights that AUD/USD was defending 0.7000 at the start of the week, trading near its lowest level since August 4 amid a bullish dollar tone.