The US Dollar Is Stuck. Americans Could Feel the Pain Soon
The US dollar has spent a month hovering around the same level. That calm-looking chart hides a bigger argument about inflation, interest rates, and whether investors still want to pay a premium for America.
The Dollar Index, or DXY, sits near 99. The case for a stronger dollar is clear. The Federal Reserve has kept rates at 3.50%โ3.75%. August producer inflation hit 5.4% year-on-year. The US added 162,000 jobs last month, while Brent crude is back above $100.
That gives the Fed reason to stay aggressive.
Other central banks are moving too. The ECB raised its deposit rate to 2.50% on Thursday. The Bank of Japan is expected to lift rates to 1.25% next week. US-Japan intervention has also helped strengthen the yen from almost 164 per dollar in July to around 155.
Is the US Dollar Becoming Weak?
High US rates matter less when yields elsewhere are rising too. Washington is also running a roughly $1.8 trillion deficit through the first 10 months of fiscal 2026.
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