I have been paying close attention to the trend of the US dollar recently, especially how it will move in the second half of the year. To be honest, it’s now much harder to judge the dollar’s direction than before.

Last year, the Federal Reserve started cutting interest rates, and theoretically, the dollar should have weakened, but the actual situation is far more complicated. Employment data has remained strong, and inflation is sticky, so market expectations for rate cuts have been repeatedly adjusted. The current consensus is that the Federal Reserve will adopt a “slow, late, and cautious” rate cut path, and some institutions even believe that the policy may remain unchanged throughout this year until a shift occurs next year.

I’ve noticed a key point: the Fed’s current hawkish stance is mainly data-driven, not the start of a new rate hike cycle. As long as employment and inflation begin to slow down, there is room for policy adjustment. But in the short term, the dollar’s trend in the second half of the year is more likely to be choppy at high levels rather than a straightforward decline.

Why do I make this judgment? Because there are many factors influencing the dollar. Interest rates are just one part; global risk sentiment, differences in central bank policies across countries, and the demand for the dollar as a safe-haven asset all matter. Recently, geopolitical developments have added new volatility, causing capital to flow back into the dollar immediately. That’s the resilience of the dollar.

Another perspective is the performance of the currencies in the dollar index. If Europe cuts rates more slowly than the US, or if Japan maintains a more accommodative policy, the dollar will tend to stay strong. So, the dollar’s trend in the second half of the year can’t be judged solely based on the US; it also depends on its relative attractiveness compared to other major currencies.

De-dollarization is indeed a real trend, but it’s a process measured in years, not something that will cause a sharp depreciation of the dollar within a few months. Central banks are reducing holdings of US Treasuries and increasing gold reserves, but the dollar’s position in the global reserve system is hard to shake in the short term.

From an investment perspective, the volatility in the dollar’s trend in the second half of the year will create opportunities. In the short term, focus on data releases like CPI, non-farm payrolls, and FOMC meetings, as each can trigger exchange rate fluctuations. If you’re engaged in swing trading, you can look for opportunities by combining support and resistance levels of the dollar index with differences in central bank policies.

The impact of the dollar’s trend on different assets is also worth noting. When the dollar is weak, gold and cryptocurrencies usually benefit because capital seeks assets to hedge against inflation. US stocks may also become less attractive as the dollar depreciates, prompting foreign investors to shift toward Europe or emerging markets.

Regarding the dollar’s trend in the second half of the year, my core view is: don’t expect a one-sided rally; high-level choppiness will be the norm. As long as new risks emerge globally, the dollar will still be in demand. But if economic data start to weaken and rate cut expectations rise, the dollar could face a new round of pressure. The key is to stay flexible, adjusting strategies in real-time based on data and policy changes.