Summary

• Despite narratives of a weakening dollar, foreign investment in U.S. securities remains robust, with $1.5T purchased in 2025 and foreign ownership exceeding 20%.
• Currency hedging by large foreign investors, especially European pension funds increasing hedge ratios, is creating persistent selling pressure on the dollar.
• Converging U.S.-Eurozone interest rates lower hedging costs, incentivizing further hedging and potentially reinforcing dollar weakness unless U.S. equity returns or Fed policy shifts.
• For non-U.S. investors, hedged U.S. equity exposure is prudent; U.S. investors seeking international diversification may benefit from unhedged ETFs and gold as a currency hedge.
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Introduction

You have not seen me deal with Forex mechanics directly. This will be my first FX article, stemming from my previous works on the macro backdrop, where I found that there is a common

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