A top economist who nailed the yen’s long decline now says the U.S. dollar has hit peak strength.
Robin Brooks, a senior fellow at the Brookings Institution and ex-chief economist at the Institute of International Finance, argues the greenback is as strong as it’s going to get, even after President Trump announced the Iran peace deal on June 17.
The U.S. dollar generally appreciates when risk appetite declines due to conflict or economic strain, and depreciates as those pressures subside.
However, instead of declining, the Dollar Index, which tracks the greenback’s value against major fiat currencies, has risen from 99.52 to over 101.30 since the peace deal announcement.
“The Dollar should have been falling after the peace deal, with safe haven inflows turning to outflows from the US, but the first Warsh Fed meeting changed all that. Speculative positioning is max long the Dollar,” he said on X.
Lopsided bullish positioning often signals a market top or imminent reversal. The dollar could come quickly drop if key releases such as the jobs report show even modest signs of slowdown, denting expectations for Fed rate cuts.
A weaker dollar could potentially put a floor under bitcoin and gold. As of writing, BTC traded near $52,300 and gold hovered near $4,000.
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