The U.S. dollar may be gearing up for a short-term comeback after sliding for four straight months.
The U.S. Dollar Index (DXY) has dropped nearly 7% since November and hit a four-year low in January. Losses were steep against the Australian dollar and even the Japanese yen. But sentiment is starting to shift.
🔹 Stronger U.S. growth outlook
🔹 Steady foreign demand for U.S. stocks & bonds
🔹 Expectations of a less aggressive policy stance ahead of midterms
🔹 Kevin Warsh’s Fed nomination easing concerns about excessive rate cuts
Options data shows traders are reducing extreme bearish bets on the dollar, hinting at stabilization — or even a Q2–Q3 rebound, especially versus euro and sterling.
Still, not everyone is convinced. Some analysts argue the U.S. administration may prefer a weaker dollar, meaning downside pressure could persist longer term.
📊 Bottom line: After months of selling, the dollar could see a near-term relief rally — but the broader 2026 trend remains debated.