US Dollar (DXY), strong rebound in 2026?U.S. Dollar Currency IndexTVC:DXYSwissquoteThe US Dollar is by far the weakest major currency on the FX market in 2025. But this situation could reverse in 2026 as the second year of the presidential term begins, a year that is historically unfavorable to risky assets and favorable to the US Dollar as a safe haven. Recall that during Trump’s first term, the first year (2017) saw a sharp decline in the dollar on the Forex, followed by a strong recovery in the second year (2018). Could we see a “bis repetita” scenario with 2026, the second year of the second term? The chart below shows the US Dollar’s last place ranking among major FX currencies. 1) The fundamental reasons that could support a rebound of the US Dollar in 2026 beyond the simple seasonality of the presidential cycle (midterms) Several fundamental factors could sustain a US Dollar rebound in 2026: •A shift in Federal Reserve policy could play a central role. If inflation persists or rises, the Fed could suspend or reverse the expected rate cuts, maintaining a yield differential favorable to the dollar and attracting foreign capital. •Stronger US growth compared to the rest of the world, driven by consumption, technology, and energy independence, would make dollar-denominated assets more attractive and boost demand for the currency. •An improvement in the trade balance, thanks to reshoring, higher exports, or lower imports, would support the dollar by limiting structural capital outflows. •Credible fiscal consolidation signals, such as a plan to reduce deficits, would strengthen investor confidence and ease concerns about public debt, contributing to a stronger dollar. •Increased political stability and greater predictability of economic policies, especially under a market-friendly administration, would reduce risk premiums and favor the US Dollar. •Higher demand for safe-haven assets in the event of geopolitical tensions (e.g., China-Taiwan or the Middle East) or a global economic slowdown would boost flows into the dollar. •Finally, the relative weakness of other major currencies — euro, yen, yuan — due to looser monetary policies or economic fragilities, would reinforce the dollar by comparison. Together, these dynamics could create a structurally favorable environment for US Dollar appreciation in 2026. 2) To validate a US Dollar rebound, we need a technical reversal signal on long-term charts, and this is not yet the case. Here’s what to watch for The historical weekly chart of the US Dollar shows how bullish reversals built up in 2018 and 2021. The conditions required are: stabilization of the dollar over several weeks, bullish divergences between price and momentum, a bullish reversal pattern, and finally, a breakout above resistance confirming the pattern. At this stage, these elements are not fully in place, and the US Dollar remains bearish on FX as long as it stays below the 100-point resistance. DISCLAIMER: This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only. The presented idea (including market commentary, market data and observations) is not a work product of any research department of Swissquote or its affiliates. This material is intended to highlight market action and does not constitute investment, legal or tax advice. If you are a retail investor or lack experience in trading complex financial products, it is advisable to seek professional advice from licensed advisor before making any financial decisions. This content is not intended to manipulate the market or encourage any specific financial behavior. Swissquote makes no representation or warranty as to the quality, completeness, accuracy, comprehensiveness or non-infringement of such content. The views expressed are those of the consultant and are provided for educational purposes only. Any information provided relating to a product or market should not be construed as recommending an investment strategy or transaction. Past performance is not a guarantee of future results. Swissquote and its employees and representatives shall in no event be held liable for any damages or losses arising directly or indirectly from decisions made on the basis of this content. The use of any third-party brands or trademarks is for information only and does not imply endorsement by Swissquote, or that the trademark owner has authorised Swissquote to promote its products or services. Swissquote is the marketing brand for the activities of Swissquote Bank Ltd (Switzerland) regulated by FINMA, Swissquote Capital Markets Limited regulated by CySEC (Cyprus), Swissquote Bank Europe SA (Luxembourg) regulated by the CSSF, Swissquote Ltd (UK) regulated by the FCA, Swissquote Financial Services (Malta) Ltd regulated by the Malta Financial Services Authority, Swissquote MEA Ltd. (UAE) regulated by the Dubai Financial Services Authority, Swissquote Pte Ltd (Singapore) regulated by the Monetary Authority of Singapore, Swissquote Asia Limited (Hong Kong) licensed by the Hong Kong Securities and Futures Commission (SFC) and Swissquote South Africa (Pty) Ltd supervised by the FSCA. Products and services of Swissquote are only intended for those permitted to receive them under local law. All investments carry a degree of risk. The risk of loss in trading or holding financial instruments can be substantial. The value of financial instruments, including but not limited to stocks, bonds, cryptocurrencies, and other assets, can fluctuate both upwards and downwards. There is a significant risk of financial loss when buying, selling, holding, staking, or investing in these instruments. SQBE makes no recommendations regarding any specific investment, transaction, or the use of any particular investment strategy. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts suffer capital losses when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Digital Assets are unregulated in most countries and consumer protection rules may not apply. As highly volatile speculative investments, Digital Assets are not suitable for investors without a high-risk tolerance. Make sure you understand each Digital Asset before you trade. Cryptocurrencies are not considered legal tender in some jurisdictions and are subject to regulatory uncertainties. The use of Internet-based systems can involve high risks, including, but not limited to, fraud, cyber-attacks, network and communication failures, as well as identity theft and phishing attacks related to crypto-assets.