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The dollar just closed January near multi-quarter lows, and ING laid out a few reasons why the pressure may not be going away anytime soon.
One big driver is global capital flows. Investors are feeling relatively optimistic about growth outside the U.S., especially in emerging markets and commodity-exporting countries. ING notes that portfolio flows into emerging markets are now at their strongest levels in more than a decade and historically, that kind of shift tends to come directly at the expense of the dollar.
Another factor is rising political uncertainty in the U.S. Recent events, including market volatility tied to geopolitical headlines and an equity sell-off, showed that the dollar didn’t behave like a traditional safe haven. That’s adding a risk premium to the currency instead of attracting defensive inflows. There’s also pressure coming from global bond markets. Japan’s sell-off in government bonds has spilled over into U.S. Treasuries and UK Gilts, pushing yields higher and weighing on currencies. ING expects this fiscal and rates dynamic to remain a theme throughout the year. Finally, Japan appears increasingly uncomfortable with the recent moves in USD/JPY. Authorities reportedly have up to $100 billion available for potential FX intervention, and ING suggests that any confirmed coordination with the U.S. would be notable the last joint action like that was back in 2011. Taken together, it paints a picture of a dollar facing headwinds from multiple angles: global capital rotation, political risk, bond market stress, and possible FX intervention. Curious how others here are positioning around this especially with emerging markets seeing renewed interest.
Source:
https://www.indexbox.io/blog/dollar-index-ends-january-2026-at-multi-quarter-lows-amid-global-shifts/