Recently, I’ve been getting asked whether the U.S. dollar will rise again. This is actually a very good question, because the dollar’s current price action really does leave people a bit baffled.

To be fair, after the rate cuts started last year, everyone assumed the U.S. dollar would weaken steadily—but the reality is more complicated than that. So far this year, the U.S. Dollar Index has been swinging back and forth between 90 and 100. After falling from the 2022 high of 114, it has accumulated a decline of about 15%, but that drop hasn’t accelerated. Instead, after geopolitical tensions escalated, it even rebounded slightly. This kind of stalemate has lasted for nearly a year, which shows that the dollar’s outlook is indeed full of variables.

One key point I’ve noticed is this: the Federal Reserve’s stance looks hawkish right now, but fundamentally it’s not kicking off a new round of rate hikes. It’s more like they’re waiting for data. As long as employment, wages, and core inflation start to slow over the next few quarters, there is still a possibility that the policy stance could shift toward neutral and even easing. In other words, the Fed is now cutting rates in a “slow, late, and minimal” way. Market expectations for rate cuts have been pushed back again and again, and some institutions even believe that throughout 2026 rates could potentially remain unchanged—meaning they won’t see a policy shift until 2027.

There are many factors that influence whether the U.S. dollar goes up or down, but the most direct one is interest rates. When interest rates are high, the dollar is more attractive, and capital flows in. When interest rates are low, capital moves to other places offering higher returns, and the dollar tends to weaken. But here’s a common misconception among investors: you can’t just look at rate hikes or rate cuts themselves—you also need to watch how expectations change. Markets are highly efficient. They won’t wait until rate hikes are confirmed for the dollar to start rising, and they also won’t wait until rate cuts are confirmed for it to start falling.

Besides interest rates, factors like the dollar’s supply, the trade deficit, and global trust in the United States also affect exchange rates. Especially in recent years, the trend of de-dollarization has indeed created structural pressure on the dollar. Many countries have started reducing their holdings of U.S. Treasuries and increasing holdings of gold, and both the euro and the yuan are challenging the dollar’s position. However, I want to emphasize that this process is measured in “years,” so it won’t suddenly cause a dramatic shift in the short term. The dollar’s core position in the global reserve and settlement system is still very difficult to replace in the near future.

So, will the dollar rise again? Based on the current situation, I believe the dollar is more likely to trade in a choppy, high-range pattern with a slightly weak bias over the coming year, rather than weakening significantly in a single direction. But this doesn’t mean the dollar will fall all the way. As long as new global financial risks emerge, geopolitical conflicts intensify, or market panic sets in, capital may still flow back into the dollar—because it remains one of the world’s most important safe-haven currencies by nature.

There’s another detail worth paying attention to: the movement of the U.S. Dollar Index depends not only on the United States, but also on the relative performance of the component currencies. For example, if Japan ends its ultra-low interest rate policy and capital flows back in, that could push up the Japanese currency, making the U.S. dollar against the Japanese currency more likely to weaken. For the Taiwan dollar, Taiwan’s interest rates tend to follow the dollar, but domestic considerations also matter. It’s expected that the Taiwan dollar will appreciate, but only by a limited amount. The euro is relatively stronger than the dollar, but Europe’s economic situation isn’t great either. If the European Central Bank gradually cuts rates, the dollar may soften somewhat, but it won’t depreciate sharply.

If you want to catch opportunities from U.S. dollar exchange-rate fluctuations, in the short term you should watch data that affect rate expectations—such as CPI, non-farm employment, and FOMC meetings. If you aren’t doing intraday trading, you can use support and resistance levels of the U.S. Dollar Index, together with policy differences among central banks, to look for swing opportunities over several weeks to a few months. For medium- to long-term investors, you can diversify U.S. dollar exposure risk using gold, foreign exchange, and other assets. When the dollar is in a high-range consolidation phase or transitioning to weakness, these kinds of allocations typically help balance an overall portfolio.

Simply put, will the dollar rise again? In the short term, a one-way surge is unlikely—but the dollar also isn’t likely to just keep falling. In this new landscape where the U.S. dollar “coexists” with multiple currencies, the best strategy is to stay flexible and adjust your positions according to data and policy changes.