A sharp divide has emerged among major Wall Street banks regarding the U.S. dollar’s trajectory into 2026. The Dollar Index (DXY), near 97.75 as of February 2026, has fallen roughly 8.1% over the preceding year. While many institutions forecast a range-bound DXY, J.P. Morgan maintains a net bearish stance, predicting a further 3% decline through mid-2026 as interest-rate differentials draw capital to higher-yielding currencies.
Financial analysts are closely debating the future of the U.S. dollar as the Dollar Index trades near 97.75, down approximately 8.1% year-over-year. Wall Street’s 2026 predictions for the DXY vary widely but generally fall between 92 and 100.
The team at J.P. Morgan, led by Meera Chandan and Arindam Sandilya, has held a consistently bearish view since March 2025. They expect a further, though more modest, dollar weakening of about 3% through mid-2026, driven by capital flows toward higher-yielding currencies.
“Our outlook for 2026 remains net bearish, though the expected decline is smaller and more uneven than the weakness we foresee for 2025,” the strategists wrote. They noted their stance could reverse if strong U.S. economic data delays Federal Reserve easing measures.
Other major banks offer differing forecasts, with Morgan Stanley projecting a potential year-end recovery for the DXY to between 99 and 100. This view cites potential fiscal stimulus and significant capital inflows related to artificial intelligence investments.
David Kelly, Chief Global Strategist at J.P. Morgan Asset Management, also addressed the currency’s path. He stated, “This should allow the dollar to resume its decline, albeit at a slower pace than in early 2025.”
The debate occurs against a backdrop of geopolitical shifts challenging dollar dominance, including a new BRICS payment system. Analysts widely expect the Federal Reserve to cut interest rates twice in 2026, influencing all currency projections.
