Brown Brothers Harriman’s (BBH) Elias Haddad highlights that the US Dollar (USD) is currently experiencing tactical support due to haven demand, which is linked to heightened shipping risks in the Strait of Hormuz. This risk has driven financial markets, with Brent crude oil prices rallying above $100 a barrel and the dollar strengthening against all major currencies, pushing the DXY index to its highest level in nearly ten months [1].
Haddad notes that the USD can continue to benefit from this haven bid, particularly as dollar funding needs spike during periods of stress, given the dollar’s dominant role in global trade invoicing, cross-border lending, global bond issuance, and FX reserves [1]. However, BBH remains cyclically neutral on the USD, expecting the DXY to trade within a 96.00–100.00 range, and observes that the DXY has overshot the level implied by rate differentials between the US and other major economies [1].
Structurally, BBH maintains a bearish view on the USD, citing fading confidence in US trade and security policy, worsening US fiscal credibility, and the ongoing politicization of the Federal Reserve as key headwinds [1]. No specific forward-looking analyst opinions or market reactions beyond these structural and tactical perspectives are provided in the article [1].
CONCLUSION
The USD is currently supported by haven demand amid shipping risks in the Strait of Hormuz, but BBH expects this to be a tactical rather than structural trend. Despite short-term strength, BBH maintains a bearish long-term outlook for the dollar due to concerns over US policy credibility and fiscal issues. Market participants should monitor risk sentiment and US policy developments for further direction.