ING: «Dollar Has Lost a Big Chunk of Its Safe Haven Value»
The US dollar’s status as a safe-haven currency was hit in 2025, according to an ING report, which forecasts further weakening in 2026.
In 2025, the DXY – an index that tracks the price of the US dollar compared to a basket of other currencies – fell nearly 10 percent with the market continuing to wonder about the status of the greenback.
According to a research report by ING, «the dollar has lost a big chunk of its safe haven value compared to 2024». Its view is based on a calculation of the difference between the Bloomberg dollar index three-month correlation with US stocks and US 10-year sovereign yields, with the dollar acting as a safe haven if the index is more negative.
«The dollar has lost some, but not all, of its safe-haven value. If we isolate the three-month correlation with the S&P500 only, that is -0.25: less negative than historical standards, but still statistically significant,» the report said. «Correlations tend to be cyclical. […] We need to be careful to conclude that this time the shift is structural, not cyclical.»
Is Global De-Dollarization Accelerating?
However, ING believes that de-dollarization is not accelerating with signs of 2025 re-dollarization in several segments, including increases in the share of global FX reserves and over-the-counter FX.
«The increase in USD share in other metrics is not consistent with the claim that last year’s dollar weakness reflected a fundamental loss in confidence in the dollar,» the Dutch lender added.
«With global central bank reserves expected to grow by around $0.7 trillion in 2026 (IMF WEO), half of it from EM Asia, and official investors cautious about the dollar, headline USD shares may continue to decline, in line with the long-term trends — but this does not automatically imply structural erosion.»
2026 Forecast
ING’s baseline view for the US dollar is bearish in 2026 with a target of 1.22 in EUR/USD by year-end. Still, the bank believes the currency is not weak when compared to the longer term.
«For all the talk of the dollar being weak, it is still very strong by historical standards. One of the best ways to appreciate the overall level of the dollar is to look at a trade-weighted currency measure which is adjusted for relative consumer price levels – or what is called a ‘real’ rather than a nominal exchange rate,» it said.
«Looking at the Fed’s measure of the dollar against 26 trading partners, last year’s sell-off has barely scratched the 45 percent rally since 2011. No wonder investors last year bought into the concept of a Mar-a-Lago accord to weaken the dollar, as Washington sought to level the global playing field for US manufacturers.»
