Unhedged How low can the dollar go?
74 snips
Feb 19, 2026 
Ian Smith, Senior markets correspondent at the Financial Times, analyzes currency and macro trends. He breaks down why the dollar is weakening despite US economic strength. He outlines three forces pressuring the greenback and discusses how politics, portfolio shifts and central bank signals shape currency moves. He also weighs scenarios for where the dollar might head next.
AI Snips
Chapters
Transcript
Episode notes
Politics, Not Just Economics, Driving Dollar Weakness
- Global investors are actively avoiding the US dollar largely because of political risks rather than purely economic reasons.
- This bearish sentiment shows in surveys, positioning data and option costs reflecting a durable shift away from dollar bets.
Three Forces Eroding Dollar Support
- Three forces are weakening the dollar: shrinking rate advantage, diversification away from US assets, and worries over US institutions and policy.
- These combined trends push investors to hedge dollar exposure and allocate new money outside the US.
Strong US Economy Doesn’t Guarantee Dollar Strength
- A strong US economy can coexist with a weak dollar because global flows and hedging can push capital abroad.
- Asset managers are actively pitching hedging and reallocation to clients, accelerating the dollar's gradual decline.