I've been closely monitoring the trend of the US dollar recently, and I’ve noticed that market expectations for rate cuts keep fluctuating. Behind this, there are actually many trading opportunities.

In September 2024, the Federal Reserve will begin cutting interest rates. Logically, the dollar should weaken, but the actual situation is much more complex. I’ve observed that non-farm employment data remains strong, and inflation stubbornly persists, which repeatedly delays expectations for rate cuts. Currently, the consensus is a "slow, late, and small" rate cut path, and some institutions even believe that rates might stay unchanged throughout 2026, with a policy shift not until 2027.

But here’s a key point: the Fed’s current hawkish stance is more data-driven rather than the start of a new structural rate hike cycle. As long as employment, wages, and core inflation begin to slow in the coming quarters, there’s still a chance for policy to return to neutral or even easing.

Looking at the dollar index, it’s currently oscillating between 90 and 100. Compared to the peak of 114 in 2022, it has already fallen about 15%. However, since the escalation of geopolitical conflicts, safe-haven buying has driven the dollar to rebound slightly. My observation is that over the next year, the dollar is more likely to fluctuate at high levels and weaken gradually, rather than decline sharply in one direction.

Many people judge the dollar’s direction solely based on rate hikes or cuts, but that’s too simplistic. Factors influencing the dollar exchange rate go far beyond interest rate policies. Dollar supply, international trade deficits, and global trust in the US all play roles. Especially with the increasing trend of de-dollarization, many countries are shifting toward buying gold and increasing holdings of other currencies, which puts structural pressure on the dollar.

However, it’s important to note that the dollar remains the world’s primary reserve and settlement currency. As long as new financial risks or geopolitical conflicts emerge globally, capital will flow back into the dollar because it remains one of the most important safe-haven currencies.

Regarding specific exchange rates, for the yen, Japan has ended its ultra-low interest rate policy, and capital inflows have pushed the yen higher. The probability of the yen appreciating and the dollar weakening against the yen is relatively high. The Taiwan dollar is expected to appreciate, but not by much, due to domestic considerations. The euro is relatively stronger than the dollar, but European economic conditions are also not very good. If the European Central Bank gradually cuts rates, the dollar might weaken slightly but not depreciate significantly.

If you want to seize opportunities from dollar fluctuations, in the short term, focus on data that influence rate expectations, such as CPI, non-farm employment, FOMC meetings, and dot plots. In the medium term, you can use support and resistance levels of the dollar index, combined with differences in central bank policies across countries, to find trading ranges spanning several weeks to months. Long-term investors can diversify risk by holding gold, foreign exchange, and other assets. Especially when the dollar is oscillating at high levels or weakening, such allocations can help balance the overall portfolio.

In short, rather than passively waiting for the dollar to rise and fall, it’s better to plan ahead and follow the trend. The dollar’s trend in the second half of the year is likely to remain in this high-range oscillation, and a big one-way move is unlikely in the near term.