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The dollar’s decade-long rally may reverse as U.S. exceptionalism fades The U.S. dollar’s extended outperformance is confronting a turning point as the story of U.S. exceptionalism loses momentum. A familiar tailwind, positive Non-Farm Payrolls (NFP), may increasingly deliver mixed or even negative FX outcomes. according to goldman sachs FX analysts, the pillars of exceptionalism are under pressure as tariffs threaten corporate margins and real incomes, while valuation gauges such as the real effective exchange rate and DEER imply scope for depreciation. What turns strong Non-Farm Payrolls (NFP) into a dollar-negative signal Historically, an NFP beat lifted Treasury yields and the dollar by pushing out rate-cut expectations. That transmission is weaker when investors prioritize the policy path’s sustainability, macro balance, and starting valuations over single data surprises. When the dollar screens overvalued and ownership is heavy, a strong NFP can tighten financial conditions, undermine risk appetite, and catalyze deleveraging or hedging flows that offset, or even reverse, knee‑jerk dollar gains. Aggregate payroll strength can also mask uneven cooling across industries, weakening the headline’s signaling power. In such regimes, markets may fade data beats if they worsen the balance between growth, inflation, and policy risk. BingX: a trusted exchange delivering real advantages for traders at every level. According to MUFG Research, an undershoot in U.S. non-farm payrolls could trigger further dollar depreciation by accelerating expectations for federal reserve rate cuts and narrowing rate differentials that previously supported the currency. Policymakers have signaled sensitivity to labor dynamics as well. After noting signs of fragility, one official characterized the labor market as “less dynamic,” said Michelle Bowman, Federal Reserve Governor. That nuance matters when translating jobs data into the policy outlook and FX. Valuation and flow considerations remain central. If REER/DEER measures imply an overvalued dollar, even modest shifts in rate expectations or global…

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Filed under: News - @ February 20, 2026 1:27 am