NEW YORK— After a tumultuous year marked by a nearly 10% decline, traders and financial strategists are bracing for a continued correction of the US Dollar in 2026. While a total market crash is deemed unlikely by most experts, the "greenback" is finishing 2025 on a decidedly negative note, mirroring the struggles of the cryptocurrency market.
Both the dollar and Bitcoin have been unable to stage a significant rebound, unlike equity markets which rapidly recovered from the shocks of the trade war and its subsequent volatility. This synchronized downturn in both traditional and digital assets has been largely attributed to the protectionist policies of Donald Trump. By initiating what some analysts call a "Third World Commercial War," the administration has effectively "pricked" the valuation bubbles of both the dollar and the major cryptos.
"The decline of the dollar we witnessed in 2025 will not stop with the end of the calendar year," says Stephen Jen, CEO of Eurizon SLJ Capital.
A Shift in Global Competitiveness The retreat of the dollar is seen as a tactical victory for the White House, as it enhances the competitiveness of American companies on the global stage. Donald Trump has long viewed the US trade deficit as a result of currency manipulation by foreign partners. Paradoxically, the current weakness of the dollar may satisfy his administration's goals, potentially tempering further aggressive tariff escalations.
According to George Saravelos, Global Head of FX Research at Deutsche Bank, the dollar remains fundamentally overvalued despite its recent slide. "We expect a further decline of approximately 10% in 2026, though at a less frantic pace than this year," Saravelos notes. "This trend confirms that the world's primary reserve currency has concluded its decade-long bullish cycle."
Frequently Asked Questions (FAQs)
Will the US Dollar crash in 2026? Most analysts, including those from J.P. Morgan and Deutsche Bank, do not predict a crash. Instead, they anticipate a "soft landing" or a controlled 10% correction as the currency adjusts from a period of extreme overvaluation.
How does a weak dollar affect Bitcoin and Ethereum? In 2025, both Bitcoin and the US Dollar moved in a rare synchronized decline. Typically, a weak dollar is bullish for cryptos; however, high volatility and regulatory uncertainty have kept both assets under pressure. For 2026, a further dollar decline could eventually provide the tailwind needed for Bitcoin to re-test its highs.
What is the "Trump Effect" on the dollar? The "Trump Effect" refers to the administration's protectionist trade policies and tariffs. While these policies are intended to boost domestic industry, they have increased global market uncertainty, leading investors to diversify away from the dollar and toward other currencies like the Euro or the Swiss franc.
Is the era of the dollar's dominance ending? While the dollar is weakening, it still accounts for the vast majority of global trade transactions. Experts suggest we are entering a "multi-polar" era where the Euro and Yuan gain ground, but the dollar remains the primary, albeit less dominant, global reserve currency.
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