US Dollar: Softer yields curb gains ahead of FOMC – Scotiabank

FXStreetJul 24, 2026 4:36 PM

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Scotiabank strategists Shaun Osborne and Eric Theoret say broad US Dollar (USD) gains are moderating as United States (US) yields retreat and risk appetite improves after a tech-led selloff. High-beta currencies outperform while Euro (EUR) and British Pound (GBP) edge higher but fail to fully exploit positive data. Geopolitical tensions around Iran and upcoming Federal Open Market Committee (FOMC) risks keep the Dollar and US yields relatively supported into next week.

USD eases but FOMC risk supports

"Yesterday’s broad dollar gains are moderating into the end of the week as crude oil prices ease and US yields edge back from yesterday’s peaks."

"High beta FX is leading moderate gains amongst the major currencies against the USD; the EUR and GBP are modestly firmer but have not been able to leverage positive domestic data surprises into any sort of meaningful outperformance."

"Investors may show a stronger preference for avoiding riskier assets into the weekend and the USD and US yield are likely to remain better supported as the market’s focus shifts inevitably to next week’s FOMC."

"Swaps pricing has nudged back a little from yesterday’s peak but OIS still indicate a not insignificant risk of a Fed hike next week (7bps of tightening priced in)."

"Despite renewed gains in energy prices, we think tightening is unlikely while Warsh’s review of Fed operations is ongoing."

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

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