Argus

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May 19, 2026

Market Outlook

Bullish

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Short

Summary

Trends in the dollar, the world's dominant currency, offer nuanced clues about the confidence that investors have in the U.S. economy and financial system. The greenback has been in high demand since the start of the pandemic, and at the beginning of 2025 was 21% above its long-run average. When global uncertainty increases, investors embark on a flight to quality and seek a safe haven for assets. The hot-dollar trend started to unwind a bit in 2025, as the greenback declined 5% on a global, trade-weighted basis. There were several factors, including the economic uncertainty caused by tariffs, the swelling U.S. federal debt, a recovery in the European economy, and simple value investing. In recent weeks, dollar angst has moved to the backburner and the greenback is ascendant again in response to the war in Iran, which has triggered another flight to quality. Since hostilities commenced, the greenback is up 5% and near cycle highs. The rally reaffirms our view that the dollar is not at risk of losing its status as the global currency of choice. At current levels, the dollar is about 19% above its 20-year average value, supported by the depth of a $27 trillion market, the Fed, and the country's time-tested political/economic system of democratic capitalism. The euro, yen, or yuan, or a combination basket, have flaws as well. We view the doll

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