As the dollar closes out a dismal year, here’s what to expect in 2026

A dismal year for the U.S. dollar is ending with signs of stabilization, but many investors believe the currency’s decline will resume next year as global growth picks up and the Fed eases further.

The U.S. dollar slumped more than 9% this year, against a basket of currencies, its worst showing in eight years, driven by expectations of Federal Reserve rate cuts, shrinking interest rate differentials with other major currencies, and as concerns about U.S. fiscal deficits and political uncertainty swirled.