US Dollar Forecast: “Hyperscalers” Join Fed And Hormuz As USD Tailwinds

The US Dollar has recovered in recent weeks after earlier weakness, with Bank of America arguing that three major themes could provide further support during the second half of 2026.

BofA identifies the “3 H’s” for Dollar upside as Hormuz, a hawkish Federal Reserve and hyperscaler-led artificial intelligence investment.

The bank argues that renewed Middle East tensions have restored some of the traditional relationship between oil prices and the Dollar. Brent crude has recovered around 20% from post-memorandum lows, increasing concerns over inflation risks and reducing the scope for aggressive central-bank easing outside the US.

BofA also maintains a more hawkish Federal Reserve view than the market, expecting three rate increases this year despite softer June inflation data.

The bank highlights comments from Fed Chair Kevin Warsh, who said that “mission accomplished is not my view after today’s data”, arguing that policymakers will need to see several more inflation reports before changing course.

The third Dollar support comes from artificial intelligence investment. BofA believes AI-related capital expenditure will continue to attract global investment into US assets while supporting American growth and potentially keeping inflation pressures elevated.

According to the bank, the top five US hyperscalers are expected to spend around $900 billion on capital expenditure in 2027, compared with around $220 billion by the top 25 non-US companies.

BofA says these forces create a “net bullish USD” environment, with US investment flows, stronger growth prospects and higher-for-longer interest-rate expectations all supporting the Greenback through the second half of the year.