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MUFG: Dollar’s Fate Tied to Fed Policy Outlook

6/26/2026

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Summary

MUFG Forecasts Dollar

MUFG (Mitsubishi UFJ Financial Group) analysts say the U.S. dollar’s future hinges on the Federal Reserve’s (Fed) policy decisions.
They say the dollar could weaken with a dovish Fed or stay strong if inflation forces higher rates.
Markets have priced in a pause in rate hikes.
Traders watch upcoming U.S. non-farm payrolls and CPI reports for clues about the Fed’s next action.

Summary

BOJ Rate Hike

A 4% rise in Japan’s Nikkei pushed the yen above 160 per dollar, near a 161.96 level not seen since 1986.
Bank of Japan (BOJ) board member Naoki Tamura said the bank should raise rates by 0.25 percentage points every few months toward a 2% neutral rate.
Gold and silver fell, sending gold ETFs to a 7.5-month low and silver ETFs to an 11-month low.

Summary

Gold Slides

Gold futures fell below 50-day, 100-day and 200-day averages.
The dollar index rose 0.20% to 101.57, highest since May 2025, making gold costlier.
FedWatch Tool shows a 49.2% chance of a 25-basis-point Federal Reserve hike in September before the June 25 PCE report.
Resistance at $4,390 and $4,500, support at $3,900 and $3,400, node at $4,000 and a Moving Average Convergence Divergence divergence with Relative Strength Index suggest a rebound.

History

Historical Context

Facing 1970s stagflation, President Carter named Paul Volcker Fed chairman in 1979. Volcker’s policy lifted the federal funds rate to a 20% peak in June 1981, pulling inflation from a 14.8% March 1980 high down to under 3% by 1983 and sparking a recession with unemployment above 10%. Analysts caution that similar tightening could again bolster the dollar.

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MUFG Forecasts Dollar

MUFG (Mitsubishi UFJ Financial Group) analysts say the U.S. dollar’s future hinges on the Federal Reserve’s (Fed) policy decisions.
They say the dollar could weaken with a dovish Fed or stay strong if inflation forces higher rates.
Markets have priced in a pause in rate hikes.
Traders watch upcoming U.S. non-farm payrolls and CPI reports for clues about the Fed’s next action.

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