MUFG: Higher Yields, Geopolitical Risks Support USD Upside

MUFG analyst Derek Halpenny highlights that the US dollar retains upside risks, supported by a combination of rising bond yields in the US and globally, heightened geopolitical uncertainty, and increasing energy costs. These factors collectively maintain a favorable backdrop for the greenback.

The ongoing uptrend in yields reflects expectations of tighter monetary policy and stronger economic resilience, while geopolitical risks continue to drive safe-haven demand. Higher energy prices add to inflationary pressures, further underpinning the dollar's strength.

MUFG's assessment suggests that near-term risks for the USD remain tilted to the upside, given the persistence of these supportive conditions.