✏️💱Forecasters Expect Dollar to Decline Into 2026: Cable FX Macro

Economists anticipate a continued weakening of the US Dollar against most major currencies through 2026, driven by expectations of Federal Reserve rate cuts (potentially 100-150 bps total into mid-2026), easing US inflation, and concerns over US fiscal policy, tariffs, and Fed independence. However, forecasts vary by institution, with some like J.P. Morgan more bearish on USD than consensus polls. The Euro is expected to outperform, potentially gaining 6-8% by mid-2026, while the Japanese Yen sees modest strengthening. Projections are medians or house views as of September 2025, focusing on end-2025 and mid/end-2026 levels.
One of the key risks to this forecast is the Fed actually delivering the priced in easing for next year, and given that the board remains data dependant, jobs figures will be in focus on the months ahead. The September jobs report is due October 3, but economists anticipate continued softness, with potential for further revisions in January 2026. Overall, while not yet in recession territory, the labor market's trajectory is seen as a flashing warning sign for the economy.

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