US dollar struggles amid “risk on” mood in broader markets

The tailwind of US equity outperformance appears to be fading for the greenback, as the DXY Index looks set to post its first weekly fall in 2024. A pullback after such a streak isn’t all that surprising, and an upside surprise in PCE data out of the US next week – while not our base case – may renew the rise in Treasury yields and the dollar. But with signs of appetite for risk strengthening globally, our sense is that the bar is now higher for the relative economic strength of the US to push the greenback meaningfully higher over the coming months.