Mitsubishi UFJ: Expects the dollar to continue weakening by about 5% in 2026

According to Jinshi News, Derek Halpenny, head of foreign exchange research at MUFG, pointed out that the US dollar may continue to depreciate in 2026, but the decline will be more moderate than this year. He emphasized that the dollar has peaked and is at the beginning of a multi-year downtrend. The dollar index is expected to drop by about 5% in 2026, a forecast that aligns with the outlook for the euro to rise to 1.24 against the dollar. The main factor driving the dollar's weakness is the divergence in monetary policy: the Federal Reserve is expected to implement three to four rate cuts in 2026, while the European Central Bank may keep rates unchanged.