USD: Recovery restrained as conflict risk seen low – DBS

FXStreetApr 22, 2026 6:55 AM

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DBS Group Research economist Chang Wei Liang notes that while oil climbing toward $100 on stalled Iran-US talks has supported the US Dollar, this rebound will be capped by low conflict risks. Furthermore, the analyst predicts that despite Fed Chair nominee Kevin Warsh's emphasis on central bank independence, his belief in AI's disinflationary impact could lean him toward rate cuts, keeping the Dollar's upside in check.

USD rebound seen capped by Fed outlook

"Iran surprised markets by refusing to attend a second round of talks with the US in Pakistan, resulting in oil prices rallying towards US$100, and the USD trading broadly higher."

"Volatility in markets is likely to pick up as both sides look to strengthen their leverage for negotiations, but any USD rebound should be restrained as a re-escalation into conflict remains unlikely for now."

"Fed Chair nominee Warsh has affirmed that he believes in the importance of an independent Fed at his confirmation hearing overnight. He stated that he has made no promises to Trump on lowering interest rates, while seeking to enact major reforms to the central bank, including a new framework for dealing with inflation."

"Still, Warsh is likely to favour rate cuts now as he holds a belief that AI should dampen inflation due to productivity gains, and this could keep a check on the USD."

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

Disclaimer: The information provided on this website is for educational and informational purposes only and should not be considered financial or investment advice.

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