The Federal Reserve is likely to slow the pace of its rate cuts over the coming months, and that change in direction could strengthen the dollar.

Markets have been assuming a rapid series of reductions, but, in my opinion, that looks increasingly unlikely. A slower pace will probably lift the greenback and reset global market dynamics.

Inflation is falling, but not fast enough to give the Fed complete freedom to act. Growth is steady, not weak. Employment data show signs of softening, yet the labour market remains robust.

These conditions point to a more deliberate central bank. Policymakers will want to ensure inflation continues to ease while protecting job stability, which makes a slower sequence of cuts the logical path.

The idea that the Fed will keep cutting in quick succession no longer fits the data I believe. I expect fewer and smaller moves.

The next cut might not come until the second quarter of 2026. In contrast, other major central banks, including the European Central Bank and the Bank of England, are expected to continue easing into next year. That divergence could give the dollar a notable boost.

A stronger dollar would influence every corner of the financial system. It affects corporate earnings, commodity prices, portfolio allocation and trade flows. The impact would extend well beyond currency markets.

In the United States, a firm dollar could help contain inflation by reducing import costs and improving purchasing power overseas. It would also support savers and investors whose foreign holdings are converted back into dollars.

However, it could present headwinds for US multinationals, particularly in technology and manufacturing, as overseas revenues shrink in dollar terms. Investors should expect this to start showing up in corporate earnings statements.

For international investors, the effects could be more far-reaching. A stronger dollar often tightens global financial conditions, particularly in developing economies that carry significant dollar-denominated debt. When the greenback rises, those obligations become harder to service.

This can slow growth and push capital toward US assets, where stability and liquidity remain unrivalled.

That said, dollar strength is not a sign of fragility, it reflects confidence. A slower pace of cuts signals discipline and credibility, both of which draw capital to US bonds and equities. That confidence, in turn, reinforces the currency’s position.

Equity investors should consider how this might shift market leadership. Periods of dollar strength tend to favour companies that benefit from domestic demand and stable input costs, such as banks, utilities, and consumer groups. Exporters and multinational tech giants could see slimmer margins. Portfolio positioning will need to account for these changing dynamics.

Commodities are another area likely to feel the effects. Because most are priced in dollars, a stronger US currency typically weighs on prices in the short term. Gold may take a breather after its strong run, though I still expect renewed upside once the Fed resumes cutting. Oil prices will remain shaped by supply factors and geopolitics, but a firmer dollar could moderate their volatility for now.

These are forecasts, not certainties. Everything depends on how the data evolves. If inflation drops faster or unemployment rises sharply, the Fed could act sooner. But if the economy remains stable and price pressures linger, the central bank will have reason to take its time. That’s why I believe the dollar’s momentum will remain supported through at least the first half of 2026.

This means adaptation, not alarm. Currency cycles drive capital flows and shape returns across asset classes. Understanding how a stronger dollar interacts with portfolios will be critical.

For US-based investors, the focus may shift toward domestically oriented sectors. For international investors, it may be time to reassess exposure and consider hedging strategies.

The Fed’s approach over the next few months will set the tone for global markets. A slower pace of rate cuts will not stall growth, but it will redefine where opportunity lies.

The dollar remains the world’s anchor currency and when the Fed eases with caution, that anchor tightens.

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London-born Nigel Green is founder and CEO of deVere Group. Following in his father’s footsteps, he entered the financial services industry as a young adult. After working in the sector for 15 years in London, he subsequently spent several years operating within the international space, before launching deVere in 2002 with a single office in Hong Kong. Today, deVere is one of the world’s largest independent financial advisory organizations, doing business in 100 countries and with more than $12bn under advisement. It specializes global financial solutions to international, local mass affluent, and high-net-worth clients. In early 2017, it was announced that deVere would launch its own private bank. In addition, deVere also confirmed it has received its own investment banking license