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Institutional Edge Q1 2026

2026 FX Volatility: The Dollar Effect
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What’s the dollar effect amid 2026 FX volatility?
Discover the inside story in Q1 Institutional Edge.

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Key Takeaways

  • Despite talk of ‘dedollarisation’, the dollar remains by some distance the world’s widely traded currency as well as the leading reserve currency.
  • Monitoring US interest rates relative to other major economies is the most critical task when assessing likely movements in the value of the dollar.
  • This year’s battle over trade tariffs damaged the dollar so it follows that new trade agreements could have the opposite effect.
  • World GDP growth is projected at around 3%, broadly in line with 2025. Divergence remains the defining feature: advanced economies are slowing, while Asia, the Middle East, and Africa continue to outperform the global average.
  • Despite talk of ‘dedollarisation’, the dollar remains by some distance the world’s widely traded currency as well as the leading reserve currency。
  • Monitoring US interest rates relative to other major economies is the most critical task when assessing likely movements in the value of the dollar.
  • This year’s battle over trade tariffs damaged the dollar so it follows that new trade agreements could have the opposite effect.
  • World GDP growth is projected at around 3%, broadly in line with 2025. Divergence remains the defining feature: advanced economies are slowing, while Asia, the Middle East, and Africa continue to outperform the global average.

“As we enter Q1 2026, global growth is expected to hover around 3%, but challenges remain. Advanced economies are slowing, long-term yields are stubbornly high, and global debt levels continue to rise. With exchange rate volatility and trade frictions adding to the uncertainty, the key question is—how will investors balance easing policies, debt management, and shifting currencies in the months ahead?”

Professor Trevor Williams

Consultant Economist at ATFX Connect

“As we enter Q1 2026, global growth is expected to hover around 3%, but challenges remain. Advanced economies are slowing, long-term yields are stubbornly high, and global debt levels continue to rise. With exchange rate volatility and trade frictions adding to the uncertainty, the key question is—how will investors balance easing policies, debt management, and shifting currencies in the months ahead?”

Professor Trevor Williams

Consultant Economist at ATFX Connect

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