Leading investment bank HSBC said in a note to clients that the US dollar could bottom out in early 2026. The US dollar has seen its worst performance in 25 years as the DXY index is down close to 8.2% year-to-date. It had fallen to 10% YTD at one point as confidence in local currencies surged. Trump’s tariffs and trade wars dampened the prospects of the USD making it weaker in the charts.
HSBC noted that the Federal Reserve’s rate cuts could ease the prospects of the US dollar. The uncertainty over the next Fed chair also weighs in on sentiment. The combination of softer monetary policy and political ambiguity could make the DXY index head south but could stabilize in 2026, wrote the bank.
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US Dollar Could Begin To Rise in 2026: HSBC
The US dollar could be bearish this year but could start to rise in early 2026, wrote HSBC in a note. The USD had reached a high of 109.6 in January but lost all its gains after Trump took over the White House. Market insiders have been saying that the Federal Reserve could deliver another rate cut in December.
Fed officials Lisa Cook, Michelle Bowman, John Williams, Alberto Musalem, and Vice Chair Jefferson are all slated to speak on Monday. Their speech will provide more clarity if the Federal Reserve intends further rate cuts in December. The US dollar’s prospects depend on the speech, and HSBC is confident of the schedule.
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HSBC remains bullish on the US dollar in 2026, and an entry position now could be beneficial. The USD could be down, but is not out in the charts. A surge in value from 2026 could reward present-day investors with better returns. The DXY index could see an upward momentum in the coming months. It is now at the 99.7 range and is struggling to climb above the 100 level.