Recently analyzing the US dollar trend, I found some quite interesting things.

First, let's talk about the current situation. The US dollar index has been weakening since the second half of last year, breaking below the 200-day moving average, which is usually seen as a bearish signal technically. The main reason is that market expectations for the Federal Reserve to cut interest rates are heating up, which directly lowers US Treasury yields, and the attractiveness of the dollar declines accordingly.

I looked at historical trends, and since the collapse of the Bretton Woods system in the 1970s, the dollar index has gone through eight distinct cycles. The most memorable was in the 1980s, when Volcker sharply raised the federal funds rate to 20%, making the dollar extremely strong at that time. But the subsequent story became complicated—Internet bubbles, financial crises, quantitative easing, the dollar weakened and strengthened repeatedly. Starting in 2022, to combat inflation, the Fed aggressively raised interest rates, pushing the dollar index to a historic high, but at the cost of economic pressure on the US.

From the current dollar trend analysis, there is definitely potential for a rebound in the short term, but the long-term downward pressure is quite strong. If the Fed really enters a rate-cutting cycle, the dollar index could further break below the key support level of 102.

Looking at major currency pairs, EUR/USD has been rising this month, breaking through 1.08, with the momentum to challenge 1.09. GBP/USD is also oscillating upward, with a core range between 1.25 and 1.35. USD/JPY is somewhat special; with the Bank of Japan facing upward pressure on interest rates, USD/JPY may continue to weaken, with 146.90 as a key technical level. USD/CNY fluctuates between 7.23 and 7.26, lacking momentum for a breakout. AUD/USD recently performed well, as Australia’s economy exceeded expectations, and the Australian dollar is also strengthening.

Regarding investment opportunities in dollar trend analysis, I think it can be viewed in two phases. In the short term (next few months), mainly swing trading, geopolitical conflicts or economic data exceeding expectations could trigger rapid volatility. Aggressive traders might buy high and sell low based on technical levels; conservative traders should wait and see, and act only when the Fed’s policy direction becomes clearer. In the medium to long term, the probability of the dollar gradually weakening is higher, so consider gradually shifting to non-USD currencies or commodities, such as the Japanese yen, Australian dollar, or gold.

The key is to stay flexible. Analyzing dollar trends increasingly depends on data-driven insights and event sensitivity; relying solely on technical analysis is no longer enough. Market liquidity, geopolitical risks, central bank policies—these all require constant attention.