Dollar Could Fall Modestly in 2026 as Fed Cuts Rates
The dollar could fall modestly next year as interest-rate differentials between the U.S. and other developed markets compress, RBC Capital Markets analysts say in a note.
The Federal Reserve is expected to cut rates two to three times next year while other major central banks hold rates or move more delicately, they say. The path to dollar weakness won't be linear, however. U.S. economic growth could outpace most developed markets.
This alongside U.S. asset outperformance will "continue to attract capital inflows to U.S. equities and credit, creating episodes of dollar strength even as the underlying trend tilts toward currency weakness." RBC expects the DXY dollar index to fall to 96.000 in the fourth quarter of 2026 from 98.184 currently.
Source: MarketTalk.com
