Experts predict US dollar will get weaker in 2026 — but that may end up helping Trump
The US dollar has a lot of influence on how the global economy takes shape, as one of the strongest currencies. But it seems to be getting weaker over the last few months. President Donald Trump announced sweeping tariffs a few months after taking office, and the market was simply not ready for it. According to a report in Investopedia, the US dollar has dropped by as much as 10% this year against a basket of foreign currencies. However, it is now down 7% year-to-date.
The world still heavily relies on the American currency, but the drop in value marked the end of the dollar’s steady gains over the last decade. Some may hope that the dollar will strengthen in 2026, but experts believe that it might not be the case. George Saravelos, global head of FX research at Deutsche Bank, believes that the dollar will weaken further but at a slower rate than it did last year.
“We project further dollar weakness but at a slower pace than 2025, leaving the trade-weighted dollar 10% weaker by end-26. If these forecasts materialize, they will confirm that this decade's unusually long dollar bull cycle is over.” The dollar will gain strength eventually, as global investors will require the currency to buy US stocks. Saravelos believes that the world is “so heavily exposed to U.S. equities that sustaining elevated inflows will be challenging.”
However, this might not be bad news for the President as a weakening dollar may help him fulfill some of his campaign promises. One of Trump’s priorities is to reduce the US trade deficits. As per TD Securities analyst Jayati Bharadwaj, the President “needs a weaker USD to sustainably shrink the trade deficit.” “For the USD to benefit from a strong US outlook, you need the outlook for the rest of the world to materially deteriorate,” she added.
The tariffs did leave many with concerns over de-dollarization, but that has not happened this year. It might not happen anytime soon, as the dollar has already gained strength towards the end of this year. There is no sign of a shift away from the U.S. dollar’s dominance in finance since the end of World War II. “The structural foundation of dollar dominance remains intact, supported by deep and liquid markets, the global reach of U.S. financial institutions, and an unmatched supply of safe assets,” Marcello Estevão, chief economist at the Institute of International Finance, wrote.
Although the future of the US dollar seems secure, experts have advised caution in the near future. “The U.S. is no longer shielded from exogenous global macro shocks but is instead the emanating source of them,” Bharadwaj wrote.
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