US Dollar Under Fire as Safe-Haven Status Comes Under Direct Threat

Mounting stress in global debt markets is eroding confidence in the U.S. dollar, with accelerating bond turmoil and capital flight signaling a dangerous inflection point for currencies and safe havens, according to economist Robin J. Brooks.

Brooks, a Senior Fellow at the Brookings Institution who previously served as Chief Economist at the Institute of International Finance and Chief FX Strategist at Goldman Sachs, framed the recent moves as a decisive inflection point. He is widely recognized for expertise in global macroeconomics, particularly exchange rate valuations, capital flows into emerging markets, and the effectiveness of Western sanctions. In his assessment, he stated:

“Serious dollar depreciation has resumed.”

The chart’s black line represents the DXY index, a widely used measure of the U.S. dollar versus a basket of major currencies, which peaked above 106 in early 2025 before turning sharply lower. By contrast, the blue line shows the dollar versus emerging markets, which began weakening earlier and declined more persistently. Vertical markers highlight key dates, including Nov. 5, 2024, Jan. 20, Apr. 9, Aug. 22, and Dec. 10, 2025, with the December marker aligning with the Federal Reserve’s rate cut that accelerated the move.

“The bottom line is that the Dollar is under fire as is the Yen and global debt markets. The dominant markets theme in 2026 is flight to safety from debt monetization. Precious metals and safe haven currencies will rally a lot further.”

His analysis reinforced expectations that global capital will continue migrating toward tangible assets and fiscally disciplined currencies as debt burdens intensify.