Recently, I’ve been getting a lot of questions about USD exchange rate forecasts, so I’ll just share my views on the U.S. dollar’s outlook.

First, let me mention an interesting phenomenon. After the U.S. Dollar Index fell for five straight days last year, it’s now in a relatively delicate position. From a technical standpoint, it has broken below the 200-day moving average, which is usually regarded as a bearish signal. But what’s the deeper logic behind it? The Federal Reserve’s policy expectations keep changing. Employment data came in weaker than expected, and the market began pricing in multiple rate cuts, which directly lowers U.S. Treasury yields and reduces the dollar’s appeal.

I’ve noticed a pattern. Every time the Federal Reserve’s policy path becomes clearer, USD exchange rate forecasts become a bit easier to make. Historically, the Dollar Index has gone through eight major cycles. Ever since the collapse of the Bretton Woods system in the 1970s, the dollar first suffered widespread depreciation, and then later entered a big bull market during the Volcker strong-handed period of fighting inflation (when the federal funds rate surged to 20%). After that, it went through long bear markets, the dot-com bubble, the financial crisis, and more. These historical cycles tell us that behind the dollar’s strength or weakness is a contest between economic fundamentals and policy orientation.

As for the current situation: if the Federal Reserve continues cutting rates and economic data keeps staying weak, the Dollar Index may maintain a bearish trend in the near term. There could be a short-term rebound, but the longer-term pressure is still there. In USD exchange rate forecasts, the Dollar Index could find support below 102.

Now let’s look at a few major currency pairs. The euro against the U.S. dollar has recently risen to 1.0835, reflecting the combined impact of dollar depreciation and improvements in European Central Bank policies. If this trend continues, the euro could keep climbing—1.09, or even higher, is possible. The British pound’s trend is similar: it’s expected to move upward with consolidation in the 1.25–1.35 range.

The USD against the Chinese yuan is particularly interesting. It’s directly affected by the economic policies of both countries. If the Fed cuts rates while China’s economy slows, the yuan will face pressure. It’s currently trading sideways between 7.23 and 7.26; only a breakout from this range would show a new direction. The USD/JPY picture is somewhat different. Japan’s wage growth has hit a 32-year high, and the central bank may consider raising interest rates, which would be unfavorable for the dollar. If USD/JPY breaks below 146.90, it could continue to move lower. On the Australian dollar side, the data are solid: both GDP and the trade surplus beat expectations. With the Reserve Bank of Australia taking a cautious stance, this provides support for the Australian dollar.

So how should you look at this from a trading perspective? In the short term, USD exchange rate forecasts are full of uncertainty. Geopolitical conflicts, economic data, and policy statements can all trigger sharp swings. For the more aggressive, one approach is to buy low and sell high in the 95–100 range; for the more conservative, it may be better to wait until the Federal Reserve’s policy becomes clearer before taking action.

Looking at the medium to long term, a deepening cycle of Fed rate cuts is highly likely. That means the dollar may weaken at a moderate pace. The advantage in U.S. Treasury yields will narrow, and capital will flow into other assets. The global trend of de-dollarization is also moving forward—while the short-term impact may be limited, in the long run it poses pressure on the dollar’s status as a reserve currency. So if you currently hold long positions in the dollar, you might consider gradually reducing your exposure and rotating into non-USD currencies such as yen and AUD, or allocating to assets like gold and commodities.

To be honest, the 2026 USD exchange rate forecast depends more on “data-driven” signals and “event sensitivity.” There’s no absolute direction—only flexible strategies. Stay alert, follow the data and policy signals, and that’s how you can seize opportunities amid volatility.