Recently, I've been looking at the trend of the US dollar and noticed an interesting phenomenon. Since last year, the US dollar index has been under pressure, especially in recent months when it broke below the 200-day moving average, which is often seen as a bearish signal.

It reminds me that the dollar exchange rate is essentially a ratio of a currency's value relative to the US dollar. For example, EUR/USD represents how many US dollars are needed to buy one euro. If this number rises, it indicates euro appreciation and dollar depreciation. The US dollar index is composed of the exchange rates of six major international currencies—such as the euro, yen, and pound—against the US dollar, reflecting the dollar's strength relative to these currencies.

Historically, the dollar has gone through several cycles. After the collapse of the Bretton Woods system in the 1970s, the dollar entered a period of excess supply; in the 1980s, Volcker raised interest rates significantly, leading to a dollar bull market; in the 1990s, the internet boom strengthened the dollar; after the 2008 financial crisis, the dollar weakened; and most recently, starting in 2022, the Federal Reserve aggressively raised interest rates to a 25-year high, suppressing inflation but challenging dollar confidence once again.

Regarding dollar trend forecasts, my observation is this: in the short term, if the Federal Reserve continues to cut interest rates, the dollar may remain under pressure. However, if geopolitical conflicts escalate or US economic data exceeds expectations, the dollar could rebound. From a technical perspective, the dollar index might find support below 102.

Specifically, for individual currency pairs, EUR/USD has recently been around 1.08. If the dollar continues to weaken and the European economy improves, the euro could keep rising. The same logic applies to GBP/USD, which is expected to fluctuate between 1.25 and 1.35. USD/CNY is trading sideways around 7.23–7.26, lacking momentum for a breakout. USD/JPY has recently been trending downward, mainly driven by Japan's economic recovery and expectations of rate cuts. AUD/USD is supported by Australian economic data and also has room to rise.

Should you buy dollars now? I think it depends on the situation. In the short term, if you are optimistic about a dollar rebound, you can look for reversal signals on the technical charts to trade a swing. But from a medium- to long-term perspective, as the Fed's rate-cut cycle deepens and US Treasury yields' advantage narrows, funds might flow into other high-growth assets. The key to dollar trend prediction still lies in monitoring Fed policies and economic data.

Overall, predicting the dollar's movement in 2026 will require flexible responses—both capturing short-term volatility opportunities and preparing for a moderate dollar weakening in the medium to long term. Data-driven and event-sensitive analysis is core; relying solely on single judgments can easily lead to pitfalls.