The US Dollar's Path Ahead in 2026

Group 1 - The US dollar is experiencing its worst week since June, with Bloomberg's dollar index indicating a significant yearly drop, the steepest since 2017, raising concerns about potential debasement [1] - Central bank reserves are shifting away from the US dollar, but there is no clear alternative currency, leading to increased interest in gold as an asset [2] - The outflow from the US dollar is relatively small compared to the significant inflow into gold, indicating a shift in investor sentiment towards alternative assets [3] Group 2 - The weakening dollar is seen as a consensus trade heading into 2026, but the outlook is mixed, suggesting that the headline numbers may not fully capture the situation [4] - Historically, at the beginning of the year, there tends to be a consensus towards dollar weakness due to long-term overvaluation metrics, although these metrics may not account for productivity gains [5] - When there is no strong bias, dollar weakness often emerges as the favored trade, contrasting with previous periods of dollar strength [6]