Societe Generale strategists Kit Juckes and Olivier Korber have stated that the recent pause in the US Dollar rally is seen as temporary, with the Dollar's strength underpinned by robust US economic growth, persistent inflation, and a favorable terms of trade shock compared to Europe and Asia [1]. According to their analysis, the US economy has been outperforming its European and Asian counterparts, and higher oil prices have contributed to a positive terms of trade shock for the US, while negatively impacting Europe and Asia [1].
The strategists note that the Dollar has already appreciated against most major currencies, specifically rising against two thirds of the other major currencies and all but two of the G10 currencies, with the exceptions being the resource-rich Australian Dollar (AUD) and Norwegian Krone (NOK) [1]. They emphasize that the 'King Dollar' narrative remains intact, referencing their 2026 FX Outlook which highlights the ongoing contest between US economic growth and Federal Reserve policy for dominance in currency markets [1].
Looking ahead, Societe Generale expects USD strength to persist through the second half of the year, supported by key drivers of US growth such as oil, AI capital expenditure, and fiscal support. Of these, only oil prices are currently retreating, suggesting continued support for the Dollar from other growth factors [1].
No immediate market reactions or specific analyst forecasts regarding the magnitude of future Dollar moves were provided in the article [1].
CONCLUSION
Societe Generale maintains a positive outlook on the US Dollar, expecting its strength to continue through the second half of the year, despite a recent pause. The analysis highlights robust US growth and favorable terms of trade as key drivers, with only oil prices showing signs of retreat.