Range holds as Fed patience persists – BBH

Brown Brothers Harriman’s (BBH) Elias Haddad notes the USD index (DXY) is trading near the middle of its 96.00–100.00 range and is expected to stay there in the near term, as it tracks rate differentials and lacks major catalysts. Structurally, BBH remains bearish on the Dollar due to US policy credibility concerns and ongoing Fed politicization.

Dollar seen rangebound but structurally weak

“The USD index (DXY) is directionless near the middle of its 96.00-100.00 range that’s held since June. We expect this range to hold in the near-term because USD is trading in line with rate differentials and there are no immediate catalysts to materially shift major central bank rate expectations. Structurally, we are bearish USD because of fading confidence in US trade and security policy, worsening US fiscal credibility, and the ongoing politicization of the Fed.”

“The Fed can afford to be patient before resuming easing. The Conference Board Consumer Confidence index improved more than expected in February and consumers are less pessimistic about the labor market. The labor differential index (jobs plentiful minus jobs hard to get) ticked up to 7.4 vs. 6.8 in January while job expectations over the next six months (more jobs-fewer jobs) rose to -10.4 vs. -13.9 in February.”

“Most Fed officials are throwing cold water on rate cuts. Chicago Fed President Austan Goolsbee (2027 voter) noted that “with core inflation hovering near 3% and unemployment steady, the case for patience remains strong.” Boston Fed President Susan Collins (non-voter) stressed “I think that it’s quite likely that it will be appropriate to hold the current range for some time,” while Richmond Fed President Tom Barkin (2027 voter) highlighted that “monetary policy is currently well-positioned for risks.””

“Kansas City Fed President Jeff Schmid (non-voter) and St. Louis Fed President Alberto Musalem (non-voter) speak today. Recall, Schmid voted to keep rates on hold at both the October and December 2025 FOMC meetings when the majority favored a cut.”

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)