Structural Shift Behind the USD Rally: Economic Resilience Reshaping Forex Market Logic ​

On November 11th, the US Dollar Index continued its rebound trend, rising 0.28% to 93.00, with an intraday peak gain of 0.5%, continuing to recover from the low since 2018 touched on Monday. This rebound is not merely an isolated technical correction, but more importantly, it marks a profound shift in the operating logic of the US dollar — moving from its role as a "safe-haven anchor" during the pandemic to an "economic resilience barometer" linked to US stock market performance. This structural change is reshaping the pricing framework of the global foreign exchange market.​

The broad-based strength of the US dollar against G10 currencies underscores its relative robustness. Among them, the USD/JPY pair rose 0.12%, hitting an intraday high of 105.68 — the highest level since October 20th, continuing its appreciation trend since the start of November. From the perspective of exchange rate data, the USD/JPY has climbed from 153.99 on November 1st to a periodic high on the 11th, reflecting the ongoing fermentation of monetary policy divergence between the US and Japan. The US dollar also saw significant appreciation against commodity currencies: the USD/CAD pair rose 0.23% to 1.3063, and although it briefly pulled back to 1.4017 on November 10th, it quickly resumed its upward momentum. However, non-US currencies showed divergent characteristics; the GBP/USD pair bucked the trend and rose 0.10% to 1.3176, indicating that some economies still possess resilience.​

The immediate driver of this rebound stems from the adjustment in market expectations regarding Federal Reserve policy. After the Federal Reserve cut interest rates by 25 basis points in early November, Chair Jerome Powell sent a hawkish signal that "a rate cut in December is not guaranteed," while New York Fed President John Williams explicitly stated that "a forecast of another rate hike in May is reasonable." This stance contrasts sharply with the market's previous aggressive expectations for monetary easing, leading the CME FedWatch Tool to show that the probability of a rate cut in December plummeted from 94% a week ago to 69.1%. The reversal in policy expectations has directly boosted the appeal of the US dollar, and its relative yield advantage has become even more prominent, especially against the backdrop of the European Central Bank signaling easing and the UK economy facing pressure.​

The deeper logic lies in the structural shift in the attributes of the US dollar. During the pandemic, the US dollar typically strengthened when the stock market fell, demonstrating classic safe-haven asset characteristics. However, the market performance on November 11th showed that while the Dow Jones Industrial Average rose 0.29%, the US Dollar Index also climbed simultaneously. This positive correlation breaks the traditional pattern. This shift originates from the market's recognition of the relative resilience of the US economy — although the ISM Manufacturing Index has contracted for 8 consecutive months, the job market remains stable. US Treasury Secretary Janet Yellen even clearly stated that "inflation has eased and the economy will not decline." This fundamental support has transformed the US dollar from a safe-haven tool into a pricing vehicle for economic prospects.​

The strengthening of the US dollar has already triggered cross-market transmission effects. In the commodity market, COMEX gold futures, suppressed by both the strong US dollar and rising US Treasury yields, closed down 0.8% at $1,861.60 per ounce, remaining at a three-month low for three consecutive days. The crude oil market was also affected; despite the positive news that OPEC+ is considering delaying its production increase plan, the appreciation of the US dollar combined with concerns about weak demand caused the gain of Brent crude oil to narrow sharply from 3.87% to 0.43%. This transmission effect is more pronounced in emerging markets, where the rising cost of US dollar financing may exacerbate the debt-servicing pressure on some economies with high external debt.​

However, the sustainability of the US dollar's rebound still faces three major tests. Firstly, regarding the upcoming inflation data: if the CPI data (to be released on Wednesday) and PPI data (to be released on Thursday) are lower than expected, it may reignite expectations for monetary easing and suppress the US dollar's performance. Secondly, the progress in resolving the US government shutdown deadlock: a prolonged fiscal impasse may weaken the narrative of economic resilience. Finally, the risk of intervention by the Bank of Japan: the rapid appreciation of the USD/JPY has aroused the vigilance of Japan's Ministry of Finance, and market intervention cannot be ruled out.

From a technical perspective, the US Dollar Index is in a critical verification period. The 93 level is a crucial psychological resistance; if it can stabilize above this level, it may challenge the 95 range. However, if it fails to break through, there remains a risk of retesting the earlier low since 2018. Institutional views suggest that in the short term, the game between policy expectations and economic data will dominate the trend, while in the medium to long term, it depends on whether the US economy can continue to outperform major global economies.​

The rebound of the US dollar is not just a fluctuation in exchange rates, but more importantly, it represents the repricing of the global economic pattern and policy paths by global capital. The shift from safe-haven attributes to pricing based on economic resilience marks the US dollar's entry into a new operating cycle. For investors, ignoring this structural change may lead to strategy failures. Instead, grasping core variables such as the policy divergence between the US and Europe, as well as differences in economic fundamentals, is the key to coping with foreign exchange market volatility.