US Dollar Plunges in 2026: Trump Policy, Rate Cut Hopes Fuel Weakness

• US Dollar Index fell to ~98 in early 2026, following 2025's largest annual decline in 8 years.
• Uncertainty over Donald Trump's tariff policy and expectations of US interest rate cuts are key drivers of dollar weakness.
• Narrowing yield advantage and speculation of a dovish Federal Reserve also pressure the dollar.
• Markets now await crucial US labor data (Payroll, Jobless claims) and news on the next Fed Chair.
• A weaker dollar benefits emerging market currencies, gold, commodities, and dollar-denominated borrowers.

Why It Matters: Dollar faces sustained pressure from policy uncertainty and rate cut expectations, signaling 2026 volatility.