US dollar strength — Will it last? | J.P. Morgan Asset Management

US President Donald Trump has entered office with the US dollar near multi-year highs. We examine what has been driving this strength and why the currency market may be prone to a reversal going forward.

What does this mean for fixed income investors?

With valuations stretched and positioning signalling an overbought USD, now would appear an opportune time for investors to consider hedging their USD risk. The USD is trading at a level not seen since the 1980s. Likewise, positioning indicators suggest the market is extreme USD long, leaving it more vulnerable to a potential sell-off. While most economic indicators point to continued USD strength, we believe tariffs will take centre stage, with the potential for the USD to weaken as Trump looks to improve global demand for US goods and services.

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Each week J.P. Morgan Asset Management's Global Fixed Income, Currency and Commodities group reviews key issues for bond investors through the lens of its common Fundamental, Quantitative Valuation and Technical (FQT) research framework.

Our common research language based on Fundamental, Quantitative Valuation and Technical analysis provides a framework for comparing research across fixed income sectors and allows for the global integration of investment ideas.

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