Recently, I’ve been looking at the trend of the US dollar and noticed a rather interesting phenomenon—if the Federal Reserve is cutting interest rates, will the US dollar still rise? The truth is that this question is much more complicated than it looks on the surface.

Let’s start with the conclusion. I believe the US dollar’s next move will be characterized by high-level range-bound fluctuations rather than a one-way drop. Why? Because the factors affecting the US dollar go far beyond interest rates alone.

In the first half of this year, the United States’ non-farm employment data has remained strong, and inflation has been sticky and difficult to bring down. This has repeatedly pushed back market expectations for rate cuts. At present, the general consensus is that the Federal Reserve will follow a “slow, late, and fewer” rate-cutting path. Some institutions even believe there may be no rate cuts throughout all of 2026, and that things may not turn until 2027. But here’s the key point: the Fed’s current hawkish stance is actually driven by data, not the start of a new interest rate hike cycle. As long as employment, wages, and inflation start to cool, there is still a possibility that policy could shift.

From a technical perspective, the US Dollar Index has been oscillating repeatedly in the 90-100 band. From its 2022 peak of 114, it has fallen by about 15%. This level is essentially a standoff, with both bulls and bears testing each other.

What I care about most is the relative attractiveness behind the exchange rate. Will the US dollar still rise? You can’t judge that by just looking at the US—you also need to see what other major central banks are doing. If Europe cuts rates more slowly and Japan keeps a more accommodative policy, the US dollar may remain resilient due to interest-rate differentials. For example, Japan recently ended its ultra-low interest rate environment, and the likelihood of funds flowing back to the yen is high, which could cause the US dollar to weaken versus the Japanese yen. But for the euro: although Europe’s economy isn’t in great shape, if the European Central Bank cuts rates at a slower pace than the Federal Reserve, the US dollar may still have support on a relative basis.

The trend toward de-dollarization is real. Central banks in various countries are reducing their holdings of US Treasuries and increasing their gold reserves—this is true. However, this is a long-term process measured in years, and it won’t make the US Dollar Index drop directly from 100 to 90 within 12 months. In the short term, the US dollar’s central role in global reserves and the settlement system is still difficult to replace.

From the perspective of trading opportunities, in the short term you can pay attention to data releases such as CPI, non-farm employment, and FOMC meetings. Each time they’re released, they could trigger exchange-rate volatility. If you’re doing swing trading, you can look for opportunities by combining the US Dollar Index’s support and resistance levels with differences in central bank policies. For medium- to long-term investors, I recommend diversifying and spreading the risk of US dollar volatility using gold, foreign exchange, and other assets—especially when the US dollar is in a period of high-level range-bound trading or starts to weaken. This kind of allocation can better balance your overall portfolio.

So, regarding whether the US dollar will still rise: my view is that in the short term, the US dollar is more likely to consolidate at high levels—unless new financial risks or geopolitical conflicts emerge, which could prompt capital to flow back. But in the long run, the pressure from de-dollarization does exist, only the change will be very gradual. So rather than waiting passively, it’s better to position early and allocate assets in line with the trend.