US Dollar Price Annual Forecast: Will 2026 be a Year of Transition?

The US Dollar (USD) is projected to enter a transitional phase in 2026, moving away from the sustained strength seen previously due to US growth outperformance and aggressive Fed tightening. FXStreet predicts a moderate softening of the Greenback, driven by narrowing interest-rate differentials and less asymmetric global growth, though not a collapse or clean regime shift. The Federal Reserve is expected to ease policy cautiously, as sticky services inflation and a resilient labor market prevent rapid rate cuts. Fiscal policy remains a complication, supporting growth but raising debt sustainability questions, while political uncertainty (including the 2026 midterms and the end of Fed Chair Powell's term) will likely cause episodic volatility. Valuation suggests the USD is rich, and positioning shows significant shorting, increasing the risk of sharp counter-moves during weakness. Geopolitical risks continue to offer background support via safe-haven flows. The base case (60% probability) is gradual softening, while a more bullish scenario depends on persistent inflation or geopolitical shocks. Technically, the Dollar Index (DXY) remains range-bound above pre-pandemic levels, suggesting downside will be choppy rather than a smooth trend reversal.

(Source：BeInCrypto)