Core Viewpoint - The US dollar index is experiencing a significant downtrend, reaching a low of 95.85, the lowest since February 2022, with a cumulative decline of over 3% since the beginning of 2026, driven by expectations of interest rate cuts by the Federal Reserve [1][2]. Economic Indicators - The US economy is showing signs of moderate slowdown, with manufacturing activity remaining below the growth threshold and retail sales underperforming expectations, leading to a reduction in economic growth momentum [1]. - Market expectations suggest that the Federal Reserve may initiate a rate cut cycle in the first half of 2026, with an anticipated cumulative reduction of 75-100 basis points throughout the year [1]. Market Dynamics - Global risk appetite is gradually recovering, and geopolitical tensions are easing, resulting in decreased demand for the dollar as a safe-haven asset [2]. - Central banks worldwide are diversifying their foreign exchange reserves, reducing dollar assets while increasing holdings in gold and other non-dollar currencies, which exerts long-term downward pressure on the dollar's international reserve status [2]. Technical Analysis - The dollar index has formed a clear downward channel, consistently trading below multiple short-term moving averages, indicating a complete bearish arrangement with no significant reversal signals [2]. - Key support levels are identified at 95.70-95.85 and 95.00, with a potential further decline to the 94.00-94.50 range if these levels are breached [2]. Commodity and Currency Correlation - The weakening dollar is inversely correlated with commodity prices, as gold and silver prices continue to rise, reaching new highs, while oil and industrial metals also gain support [3]. - Major non-dollar currencies, including the euro and pound, are strengthening against the dollar, further impacting the dollar index negatively [3]. Short-term Outlook - In the short term, the dollar index may experience a slight technical rebound within the 95.70-96.00 range, but the rebound potential is limited, with strong resistance expected at 96.80-97.00 [4]. Mid-term Outlook - The mid-term trajectory of the dollar index will heavily depend on the Federal Reserve's policy decisions and US economic data performance. If rate cut expectations materialize and economic data weakens further, the index may drop to the 94.00-94.50 range [5].