Dollar in 2026: Why USD Dilution May ContinueU.S. Dollar Currency IndexTVC:DXYshakatrade1_618A year ago I mapped out a bearish DXY path over a one-year horizon, and the move played out with the index dropping roughly from 110 to 96. Now it’s time for a 2026 forecast. After revisiting both the technical structure and the fundamentals, my base case remains the same: a weaker DXY DXY Fundamentals: the Treasury problem is not “2035” — it’s 2026 There is an issue the market prefers not to discuss openly: in 2026 the U.S. must refinance a massive amount of debt, and it will do so in a world far removed from the zero-rate era. Much of that debt was accumulated when servicing costs were minimal. Rolling that same volume into materially higher yields means higher interest expense, more budget pressure, and a growing reliance on consistent demand at auctions. From there, the policy menu has no easy options. Large spending cuts are politically difficult. Meaningful tax hikes are also difficult. Tightening liquidity hard enough to pressure markets is undesirable, especially in an election-driven environment. That is why the path of least resistance is continued USD dilution through softer financial conditions, expectation management, and allowing real debt burdens to erode over time. Add the political-economy layer: a push to bring production back home is structurally easier to support with a weaker USD. Bottom line: 2026 looks like a year of continued pressure on the dollar, which is why my base case remains further USD depreciation. Technicals: the key level is 100, and there are magnets below Technically, the picture is consistent with the weak-dollar thesis. 100 remains the key area and psychological line where supply is concentrated. Above it sits a sell-side imbalance/FVG zone, while below there are still higher-timeframe imbalances that often act as magnets for price. Wave logic (base case) My base case is a double zigzag (dZ). Within that structure, I expect a final wave C to complete the current leg and transition into the final wave Y, effectively finishing the broader corrective pattern. Targets: approximately 95.5 → 94 → 93, the (c)/(Y) area aligned with the 0.382/0.618 references on the mapping. Alternative scenario: what would make me flip The bullish alternative activates only on clear evidence. If price decisively reclaims 100 and holds above it for a sustained period, ideally confirmed on the daily and weekly, then a bullish continuation scenario opens up. Until that happens, upside is an alternative, not the base case. Summary Priority: continued USD weakness and a test of the lower magnets at 95–93. Invalidation: a sustained reclaim above 100 and acceptance there.