Agencies: The dollar could fall in 2026 due to the Federal Reserve's interest rate cuts

Luca Paolini, strategist at Pictet Asset Management, said that the dollar will face a new round of weakness next year as slowing economic growth paves the way for the Federal Reserve to further cut interest rates. He noted that the dollar's interest rate spread is narrowing significantly. "We expect the U.S. economy to become slightly weaker, which will allow inflationary pressures to slowly subside." Relatively speaking, economic growth in the rest of the world is likely to improve, especially in Europe and Japan. On top of that, the dollar valuation remains on the high side. Pictet expects the dollar index to fall to 95 by the end of 2026 from around the current 99.55.