Dollar's Potential Decline in 2026: Analysis and Predictions

According to ChainCatcher, Mitsubishi UFJ's Head of Forex Research, Derek Halpenny, has indicated that the U.S. dollar may continue to depreciate in 2026, albeit at a more moderate pace compared to this year. Halpenny emphasized that the dollar has peaked and is at the beginning of a long-term downward cycle. The dollar index is expected to decrease by approximately 5% in 2026, aligning with projections for the euro to rise to 1.24 against the dollar. The primary factor driving the dollar's weakness is the divergence in monetary policies. The Federal Reserve is anticipated to implement three to four rate cuts in 2026, while the European Central Bank is likely to maintain its current rates.