Germany’s 2026 Growth Outlook Strengthens on Fiscal Spending 
US Comfortable With Canada Trade Standoff as Import Bans Loom 
Dollar Holds Near Two-Month High as Yen Approaches 160 
China Agrees to Buy 20 Million Tons of U.S. Coal 
Canadian Dollar Faces Pressure as Fed-BoC Policy Gap Widens 
Asian Stocks Fall as Surging Bond Yields Rattle Markets 
US 10-Year Treasury Yield at 6% Emerges as New Market Risk Threshold 
Wall Street Ends Flat as Oil, Treasury Yields and Fed Jitters Rattle Markets 
Fed’s Hammack Says Bond Yield Surge Is Not Driven by Inflation Fears 
Asian Stocks Fall as Bond Yields Surge Ahead of Trump-Xi Summit 
US Stock Futures Fall as Treasury Yields Surge Ahead of Trump-Xi Summit 
Japanese Bank Stocks Surge as Bond Yields Fuel Rate Hike Bets 
Oil Prices Jump 3% as Houthi Attack Revives Supply Fears 
Trump, Xi Focus on Trade and AI at White House Summit 
Dollar Falls as Oil Eases, Yen Jumps on Intervention Signals 
Asian Currencies Mixed as Dollar Holds Near Two-Month High 
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The U.S. dollar has edged higher in recent days, but UBS anticipates continued depreciation through 2025. As of 06:40 ET, the U.S. Dollar Index rose 0.3% to 98.960, rebounding from a three-year low. The euro dipped 0.2% to $1.1397, though it's still up over 5.5% this month, while the yen weakened, pushing USD/JPY to 141.89, though down 5.8% for April.
UBS analysts attribute the dollar’s ongoing slide to factors resembling capital flight, including increased FX volatility, skewed risk reversals favoring dollar puts, and steepening of the U.S. Treasury curve. This week saw 10- and 30-year Treasury yields climb even as 2-year yields dropped, with tighter swap spreads reinforcing the perception of longer-term U.S. debt as riskier.
UBS maintains a bearish outlook on the dollar, citing capital outflows outweighing any positive effects from trade tariffs. The bank now expects EUR/USD to reach 1.23 and USD/JPY to fall to 130 by the end of 2025. It believes markets are recalibrating, seeking a risk premium that justifies holding U.S. assets amid rate differentials.
Additionally, UBS forecasts a significant narrowing of the interest rate gap between the Federal Reserve and European Central Bank over the next two years. This shift, it says, will be priced in by late 2025, supporting a peak in EUR/USD.
