Will the Dollar’s Surge End in Whiplash?

The US dollar has been on a tear this summer. The Japanese yen and the euro have fallen to their lowest levels against the greenback in two decades; the euro, long worth more than one dollar, is now hovering close to parity.

The US Federal Reserve’s broad trade-weighted dollar index has almost re-attained the peak it reached in March 2020 amid the panic triggered by the start of the COVID-19 pandemic. In fact, if one adjusts for inflation in the United States and its trading partners, it is already higher .