Dollar firmness to persist in 2022

Sources: Bloomberg and Wells Fargo Investment Institute. Daily data from January 1, 2014 to March 31, 2022. The DXY Index measures the value of the U.S. dollar relative to major developed market currencies, notably the euro, the Japanese yen, and the British pound. Fed = Federal Reserve. ECB = European Central Bank. QE = quantitative easing. DXY = U.S. Dollar Index. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results.

Key Takeaways

  • U.S. economic outperformance and widening rate gaps may support the dollar versus the euro and yen well into 2022, and the impact of the war in Ukraine coupled with Russian sanctions will likely reinforce the dollar’s rise.
  • With the dollar gaining against developed market currencies, we expect pressure on emerging market foreign exchange rates to continue in 2022.