US dollar has lost more than 11% against the euro and about 8% against the Japanese yen so far this year.
The escalating West Asian conflict is likely to help the dollar hold on to its haven role — but only just, the latest Bloomberg Pulse survey shows.
A little more than half of 251 respondents think the US currency will regain its status as a safe asset as Iran and Israel continue to carry out attacks on each other. Yet participants also see the Bloomberg Dollar Spot Index falling over the next month, according to the poll conducted June 13-18.
“While we expect further dollar weakness, investors now perceive more two-way risks,” Goldman Sachs Group Inc. strategists including Christian Mueller-Glissmann and Michael Cahill wrote in a note to clients. “Some argue the depreciation may be overdone, especially given resilient US asset returns.”
The divergence underscores a shift in perceptions of the greenback, as global investors grow more averse to President Donald Trump’s policies. While geopolitical tensions in the past week have limited its decline, sentiment towards the US currency remains overwhelmingly bearish.
The share of respondents expecting Bloomberg’s dollar gauge to fall over the next month is the smallest since February, according to Pulse survey data. The index was set for its first weekly gain since May.
Beyond the revival of haven demand, the greenback also received support from a Federal Reserve policy decision on Wednesday, where Chair Jerome Powell warned of the inflationary impact of tariffs and said policymakers don’t have great conviction in their outlook for lower rates.
All the same, this week’s advance barely dents the greenback’s battering this year. It has lost more than 11 per cent against the euro and about 8 per cent against the Japanese yen so far this year.
A weaker dollar is here to stay, according to Invesco Ltd Senior Portfolio Manager Kristina Campmany. Recent shakeups in US policy mean that there’s now a premium for holding the currency, Campmany said earlier this month at Bloomberg’s Money & Macro: An Evening with Markets Live event in New York.
As for Treasuries, higher oil prices resulting from the Middle East conflict will add to price pressures that will temper the bond rally — that’s according to 49 per cent of survey respondents. About a third said the crude spike will have no effect on US debt.
The appeal of Treasuries in times of turmoil was clear. When asked which asset will deliver better volatility-adjusted returns over the next month, 54 per cent of respondents favoured bonds over US stocks.
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Published on June 20, 2025
