I’ve been thinking about a question lately: how should we view the future trend of the U.S. dollar? Especially now, when rate-cut expectations are shifting back and forth and geopolitical risks are rising.

Let me start with the conclusion. I think in the second half of 2026, the U.S. dollar is more likely to see a range-bound pattern at high levels and a mildly weak consolidation—rather than a one-way, large-scale decline. But that doesn’t mean the dollar will slide all the way down. As long as new global financial risks or market panic emerge, capital will still flow back into this world’s most important safe-haven currency.

Why do I make this judgment? First, look at the current data. Nonfarm payrolls have remained on the strong side, and inflation stubbornly hasn’t come down, causing the market to repeatedly push back expectations for the Federal Reserve to cut rates. The current consensus is essentially a rate-cut path of “slow, late, and small.” Some institutions even believe that throughout 2026, interest rates may stay unchanged. But here’s the key point: the Fed’s current hawkish stance looks more like it is driven by incoming data than the beginning of a new structural rate-hiking cycle. If employment and core inflation begin to cool over the next few quarters, there is still a chance that the policy stance could shift back toward easing.

What is the essence of exchange rates? Put simply, it comes down to the relative attractiveness of different currencies. The U.S. Dollar Index is currently moving within the 90 to 100 range, down by about 15% from its 2022 peak of 114. But what does that number reflect? It’s not just about changes in U.S. policy itself—what matters is also what major central banks in Europe, Japan, and elsewhere are doing. If other countries cut rates as well, the dollar may not necessarily fall noticeably just because the U.S. cuts rates.

I’ve noticed that de-dollarization is indeed a long-term trend. Many countries are starting to reduce their holdings of U.S. government bonds and increase their gold holdings, reflecting global doubts about the dollar’s dominance. However, this is a gradual process measured in years, and it won’t cause the U.S. Dollar Index to drop directly from 100 to 90 within the next 12 months. In the short term, the dollar’s core role in global reserves and settlement systems is still difficult to replace.

When it comes to how future dollar movements might affect different asset classes, I think it’s worth paying attention. A weaker dollar is usually beneficial for gold and cryptocurrencies, because capital tends to look for assets that hedge against inflation. Bitcoin—often referred to as “digital gold”—generally performs well when the dollar depreciates. For U.S. equities, rate cuts tend to encourage capital inflows, but if the dollar becomes too weak, foreign investors may shift to other markets.

From the perspective of other currencies, the Japanese yen could strengthen because Japan ends its ultra-low interest-rate policy, which may drive capital back into yen assets. The New Taiwan dollar is expected to appreciate during the U.S. rate-cut cycle, but the move likely won’t be that large, because Taiwan itself has its own domestic issues. As for the euro, although it is relatively stronger than the dollar, Europe’s economy is on the weak side and inflation is still high—so the dollar is unlikely to depreciate significantly.

If you want to take advantage of these fluctuations, in the short term you should watch data such as CPI, nonfarm employment, and FOMC meetings—these will affect rate expectations. For medium- to long-term investors, you can diversify by allocating to gold, foreign exchange, and other assets to hedge against dollar volatility. When the dollar is range-bound at high levels or in a weakening phase, these types of allocations often help balance the overall asset portfolio.

In summary, the future trend of the U.S. dollar won’t be a simple one-way market. Instead, it will be complex fluctuations driven by multiple factors. Rather than waiting passively, it’s better to plan ahead and follow the trend.