The Dollar’s Role as a Risk-Off Currency Post-Fed Moves The US dollar often strengthens as a risk-off currency following Federal Reserve policy shifts, reflecting its safe-haven appeal during market uncertainty. When the Fed signals higher interest rates or tighter monetary policy, global investors flock to the dollar, seeking stability amid volatile conditions. This trend occurs as higher yields on US assets attract capital, boosting demand for the currency. Conversely, dovish Fed moves may weaken the dollar as risk appetite rises, prompting investors to seek higher returns in riskier assets. The dollar’s dominant global reserve status further reinforces its safe-haven role, especially during geopolitical tensions or economic downturns. This dynamic highlights the dollar’s unique position as both a barometer of global risk sentiment and a key player in the international financial system.