But a dollar risk premium appears to be rebuilding regardless — most clearly in last week's sudden swoon. Like all attempts by Wall Street to model measures of risk, there are many different ways to slice and dice what a dollar risk premium might look like and even what it might represent. Once again, a risk premium seemed to reopen and the euro surged up through US$1.20 even though the US two-year yield gap in favour of the dollar had climbed some 20bps through January. Writing before Friday's nomination of Kevin Warsh as the next Fed chair steadied the dollar ship somewhat, strategists at Morgan Stanley detailed how they view this dollar risk premium. Risk premia and the anti-dollarBarclays currency analysts also reckon dollar risk premia have jumped again this year after the Greenland row and the joint US-Japan currency action, and this has offset other dollar positives from economic and wider market performance.

Source: The Edge Markets February 03, 2026 10:15 UTC