The dollar’s dip will not become a sustained decline

The ENDLESS queues, filled with American accents, outside Dishoom, a chain of upmarket British curry houses that has gained international fame thanks to TikTok, tell a story which anyone who has recently visited Paris, Rome or Tokyo can confirm: the dollar is mighty. American tourists are rushing to take advantage of bargain sterling-, euro- and yen-denominated holidays.

Those who booked early will have scored the biggest bargains, however. The dollar is still strong by the standards of the past two decades. But since its peak in September, it has dropped by 13% against a basket of currencies. The sell-off accelerated last week, when the dollar fell by 3%—a big move for a currency. The dxy index, which measures the currency against six others, is at its lowest since April 2022, just after the Federal Reserve started to raise interest rates.