The U.S. dollar's strong rally in 2026 is receiving fresh support as major global pension funds scale back currency hedges that were put in place after last year's "Liberation Day" market turmoil, reducing a key source of selling pressure on the greenback, according to a Reuters report.
The dollar has been buoyed by rising U.S. real interest rates following stronger inflation readings and the appointment of Kevin Warsh as Federal Reserve chair, reinforcing expectations that the central bank will maintain a hawkish policy stance. Reuters reported that the shift has prompted overseas institutional investors to rethink the cost of hedging their U.S. dollar exposure.
