Can the dollar hit a bottom in the first quarter of 2026?

Important Analyses on the Future of the Dollar

HSBC Global Investment Research strategists have made striking predictions about the U.S. dollar. According to their strategic analysis, there is a possibility that the dollar will reach a bottom level in the first quarter of 2026 or earlier. This situation could signify a significant change in the foreign exchange markets.

Interest Rate Cuts and Market Expectations

The strategists indicate that the Federal Reserve may implement an interest rate cut in December, while they predict that no further cuts will occur throughout 2026. In the money markets, there remains a mixed view on the potential interest rate cut expected in December. However, a total cut of 85 basis points is being priced in until the end of 2026. This situation may be seen as a reflection of how investors will react to the impending interest rate decisions.

Expectations for the Euro Against the Dollar

HSBC analysts predict that the euro could rise to 1.20 dollars in the fourth quarter of this year and the first quarter of next year. However, following this rise, it is expected that the euro will decline to 1.18 dollars throughout the remainder of 2026. Reports indicate that the euro recently traded at 1.1587 dollars, reflecting a 0.1% decrease, prompting investors to be more cautious regarding the market's trend.

Conclusion

Considering the fluctuations in the foreign exchange markets and the effects of monetary policies, it is expected that the competition between the U.S. dollar and the euro will intensify in the upcoming period. It is crucial for investors to make careful decisions during this process and closely monitor market trends.