The U.S Dollar had a difficult year & technical analysis is revealing something unexpected...
What has happened to the U.S. dollar in 2025, and what can we expect in 2026?
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Abstract:USD Back on the Throne, EUR Drops, GBP Bounces Off Support - US Market Open
MARKET DEVELOPMENT – USD Back on the Throne, EUR Drops, GBP Bounces Off Support
EUR: A reality check for the Euro, which came back under pressure after Eurozone PMIs (Mfg. in particular) fell short of estimates. In reaction the Euro drop to lows of 1.1250, which in turn keeps the currency within its recent range. The apparent green shoots from Asia have yet to stem through into the Euro-Area, thus keeping EURUSD offered.
AUD: Main highlight overnight had been the Australian jobs report, which to the RBAs delight, provided a set of robust figures. Consequently, AUDUSD drifted higher, however, yet again the 0.7200 capped further upside, which in turn saw the pair drift back towards 0.7150.
GBP: Despite better than expected retail sales across the board, the initial bid in GBP was subsequently pared amid the broad strength in the USD index. 1.3000 area continues to keep GBPUSD supported and thus confine the pair to a relatively tight range.

Source: Thomson Reuters, DailyFX
DailyFX Economic Calendar: – North American Releases

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What has happened to the U.S. dollar in 2025, and what can we expect in 2026?

The US Dollar Index (DXY) remains steady near 98.00, supported by a mix of technical recovery and external currency weakness. While markets await definitive signals on the Fed's 2026 cutting cycle, technical breakdowns in major peers are driving price action.

The divergence between Federal Reserve guidance and market pricing is widening as traders position for 2026, setting the stage for significant volatility in the US Dollar. While the Fed’s latest dot plot conservatively suggests a single 25-basis-point rate cut in 2026, major financial institutions—including Goldman Sachs and Citi—are pricing in a more aggressive easing cycle of 50 to 75 basis points.

The market capitalization of the six largest US banks surged by approximately $600 billion in 2025, driven by a dual tailwind of financial deregulation and a resurgence in investment banking. This rally has widened the valuation divergence between American lenders and their European counterparts, reinforcing a theme of US financial exceptionalism that continues to influence global capital flows.