DBS Bank: Fed Rate Hike Does Not Signal Start of Strong Dollar Cycle

DBS Bank forex strategist Philip Wee pointed out that the Federal Reserve's rate hike does not mean the dollar will enter a sustained upward trend. He stated that this is not the rate hike cycle led by the U.S. in 2022, but rather the Fed is catching up with other major central banks to address inflation risks and prevent a chain reaction triggered by energy price shocks. Wee also mentioned that the U.S. Treasury market remains a key factor suppressing market confidence, with 10-year and 30-year Treasury yields remaining firm, indicating that the game around long-term borrowing costs has yet to be resolved. DBS Bank expects the dollar index DXY to continue to stay within the range of 96 to 102 formed since mid-2025.

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