Fed Hawkishness Replaces Oil as Key Dollar Support: OCBC

According to OCBC economists Sim Moh Siong and Christopher Wong, the main support for the US dollar has shifted from elevated oil prices to a more hawkish Federal Reserve policy stance and a flatter US yield curve.

The analysts note that while oil-driven inflationary pressures previously bolstered the greenback, the market's focus has now turned to the Fed's tightening cycle and its impact on relative interest rate differentials.

This change in dynamics suggests the dollar's recent strength is increasingly tied to Fed policy expectations rather than commodity price movements.