The U.S. Dollar Index (DXY) may face increased volatility and a persistent risk premium throughout 2025 due to potential tariff threats, according to a recent Deutsche Bank report. The analysis suggests that U.S. policymakers might be less influenced by financial market reactions than previously anticipated, which could lead to heightened fluctuations in foreign exchange markets. "It does seem possible that policymakers will be less constrained by financial market reactions than the market has believed," Deutsche Bank analysts note. This evolving policy landscape could bolster the dollar and other safe-haven currencies as the year progresses, reflecting a shift in market dynamics and investor sentiment.