When the Dollar Gives Way, Global Allocation Shifts

This report, authored by Mike Reed, examines the drivers of the dollar’s 2025 reversal and the allocation opportunities emerging from a weaker USD environment 

• After a decade of dominance, the dollar fell ~10% YTD, erasing half of euro-based equity gains and turning U.S. fixed income returns negative once FX effects are included (page 1, charts 1, 4–5) 

• Fed rate cuts alongside rising concerns over policy independence have undermined support for the currency and strengthened the case for reallocating away from USD assets (page 2) 

• EM equities, EM debt, and Eurozone bonds stand to benefit from improved fundamentals, stronger inflows, and valuation support as the dollar weakens (pages 2–3, charts 2–3) 

Explore the full analysis to assess how a shifting currency regime may reshape cross-asset opportunities in the year ahead.