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Mitsubishi UFJ: It is expected that the dollar index will fall by about 5% in 2026.
[Mitsubishi UFJ: The US Dollar Index is Expected to Fall by About 5% in 2026] Derek Halpenny, head of forex research at Mitsubishi UFJ, pointed out that the dollar may continue to depreciate in 2026, but the decline will be milder than this year. He emphasized: “We basically believe that the dollar has peaked and is currently at the beginning of a multi-year downward cycle.” The dollar index is expected to fall by about 5% in 2026, a forecast consistent with the outlook for the euro to rise to 1.24 against the dollar. The bank believes that the main factor driving the dollar weaker is the divergence in monetary policy: the Fed is expected to implement three to four more rate cuts in 2026, while the European Central Bank may keep interest rates unchanged, thus supporting the euro and weakening the relative attractiveness of the dollar.