FX.co ★ Dollar Starts 2026 on Weak Footing

On the first trading day of 2026, the US dollar dropped to approximately 98.2, continuing its most significant annual decline over the past eight years. The dollar lost around 9% in value last year, influenced by the uncertainty surrounding policy after President Donald Trump introduced tariff measures. Additional factors included growing expectations for Federal Reserve policy easing, a diminishing yield advantage compared to other currencies, and investor concerns regarding fiscal deficits and the Federal Reserve's independence. Currently, traders are anticipating crucial US economic reports, such as payroll data and weekly jobless claims, which are set to be released next week. These reports are expected to provide new insights into labor market conditions and potential interest rate trends for the year. Attention is also shifting to the leadership of the Federal Reserve. President Trump is forecasted to select a successor to Jerome Powell early this year, with market speculation suggesting a preference for a more dovish appointment. Traders are currently anticipating two interest rate cuts this year, whereas the Federal Reserve has projected only one.