Dollar Weakness: Cyclical Pressures or Structural Shift?

In this paper, we discuss:

• Dollar weakness reflects rising US fiscal risk, political uncertainty, and doubts about Fed independence;
• The dollar now relies more on financial dominance and equity inflows than on industrial strength;
• A deteriorating NIIP and equity-heavy foreign holdings increase vulnerability to market corrections;
• Treasuries face diversification pressure, with central banks raising gold allocations;
• Despite erosion at the margins, no viable alternative can yet replace the dollar’s global role.

Download PDF: Dollar Determinants