The US Dollar continues to face significant downward pressure, a trend President Trump appeared to endorse by stating, “The dollar’s doing great.” Analysts at Brown Brothers Harriman (BBH) note that this indifference is unsurprising, as a weaker dollar aligns with the administration’s goal of revitalizing American manufacturing.
According to BBH, the USD has “firmly undershot” the levels suggested by current interest rate differentials. They argue that significant “structural drags”—namely fading confidence in US trade and security policy, the politicization of the Federal Reserve, and worsening fiscal credibility—are outweighing a neutral cyclical backdrop and pulling the currency lower. Against this backdrop, the FOMC is widely expected to keep its policy rate unchanged at 3.50-3.75% during today’s decision.