The dollar's rollercoaster ride is far from over, and this week promises to be a nail-biter for traders and investors alike. Credit Agricole warns that the greenback will remain in the spotlight, with a slew of economic events poised to shake things up. But here's where it gets intriguing: despite the challenges, the firm believes the dollar might just catch a break – if the stars align.
In their latest note, Credit Agricole highlights the ongoing 'USD rebalancing' theme as a key focus. Investors will be dissecting the December TIC data, searching for clues that foreign appetite for US Treasuries (USTs) and stocks might be waning. And this is the part most people miss: while the data is crucial, it’s not the whole story. The TIC report measures foreign holdings of US Treasuries in US custodians, but China, for instance, could still be buying through non-US channels like Belgium or Luxembourg. This nuance could significantly alter the narrative.
Adding to the drama, market participants will also zero in on the December core PCE deflator, February PMIs, and the January FOMC meeting minutes. But here's the controversial bit: Credit Agricole argues that many Fed-related negatives are already priced into the dollar, suggesting it could consolidate unless we see disappointing data or a dovish Fed surprise. Do you agree, or is the dollar in for a rougher ride? Let’s discuss in the comments.
Beyond the usual economic calendar, two wildcard events could stir the pot. First, the US Treasury TIC report for December 2025, due on February 18, will offer fresh insights into foreign demand for US debt. For context, foreign holdings hit a record $9.36 trillion in November 2025, even as China’s direct holdings dropped to their lowest since 2008. The question is: Are we getting the full picture, or is China simply rerouting its purchases?
Second, the US Supreme Court’s long-awaited decision on Trump-era trade tariffs could drop as early as February 20, introducing late-week volatility. This ruling has the potential to reshape global trade dynamics and send ripples through currency markets. For more details, check out this update: US Supreme Court says next Friday will be a decision day.
In short, this week is packed with events that could either stabilize or upend the dollar. Will it find relief, or will new challenges emerge? One thing’s certain: the currency markets won’t be boring. What’s your take? Are you bullish, bearish, or sitting on the fence?
