Macro/US Monetary Policy/Market Detail

Will trade-weighted dollar fall below 115 by June 30, 2026?

activeGlobal SpilloverResolves: June 30, 2026

The Condition

Fed cuts ≥25bp at March 18, 2026 FOMC meeting

External probability: 5.9%Source: CME FedWatchResolves: March 18, 2026

Our Ensemble Estimates

If condition is true

71%

Model agreement: 92%

Given Fed cuts ≥25bp: Will trade-weighted dollar fall below 115 by June 30, 2026?

If condition is false

40%

Model agreement: 89%

Given Fed holds: Will trade-weighted dollar fall below 115 by June 30, 2026?

Causal Effect

+31pp(positive)

A Fed cut is worth ~31 percentage points to the probability of dollar falling below 115, accelerating rate differential compression — the strongest causal effect in this analysis

Unconditional probability:41.8%(blended: P(Y|T) × 5.9% + P(Y|F) × 94.1%)

Why This Matters

Tests whether a rate cut accelerates dollar weakening beyond the 115 threshold identified as material for import price pass-through. The trade-weighted broad dollar is at 117.5, already down 7.6% over 12 months. A cut would widen the rate differential compression that is driving the depreciation (rate differential is the dominant factor per the analysis). Below 115 would compound tariff-driven import inflation.

Resolution Criteria

FRED series DTWEXBGS (Trade Weighted U.S. Dollar Index: Broad, Goods and Services) shows a daily closing value below 115.00 at any point between March 18, 2026 and June 30, 2026

Source: FRED series DTWEXBGS (Federal Reserve Broad Dollar Index)Date: June 30, 2026

Source Analysis

Trade-weighted broad dollar below 115 pushes 12-month depreciation beyond 9.5%, increasing import price pass-through

Global SpilloverDOLLAR_REGIMEPriority: HIGH

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