Trump Plans to Lower the Dollar in 2026. Part 2

Ben Graham · Novembro 11

I certainly cannot conclude that all of Trump's decisions in 2025 were aimed at lowering the dollar's exchange rate. Instead, this is a pleasant bonus to the American president's policies. However, if certain decisions by Trump were subtly geared towards reducing the dollar's attractiveness to market participants, then he truly deserves a Nobel Prize in Economic Sciences.

In reality, I do not believe the plan was for the dollar to sharply decrease in 2025. Looking at charts from the past 20-25 years, it becomes clear that even a collapse of the American currency in 2025 would not constitute an actual long-term collapse. In 2008, 1 euro cost $1.60. Last year, it fell almost to parity with the American currency. Thus, over 16 years, the euro has become 40% cheaper. It took the euro 16 years to incur such losses. And not all of this time did the European currency experience a decline.

Therefore, a 10-12% decrease in the value of the U.S. dollar this year is a pleasant bonus. However, it is insufficient to correct the chronic trade balance deficit of the U.S. Economists note that the new presidential administration has achieved an unprecedented phenomenon of stock market growth and dollar depreciation through currency risk hedging. In simple terms, investors actively bought American securities (especially amid the AI boom) because they did not want to miss out on profits. However, at the same time, they hedged their risks due to the uncertain prospects of Donald Trump's policies through dollar sales.

In 2026, for the same reasons, a similar picture may emerge. Investors will continue to hedge their risks through dollar sales. Major central banks around the world are reducing their dollar reserves. New trade conflicts will further increase investors' desire to hedge.

Trump also has another card up his sleeve. This card is the Fed. The leader of the White House needs not only a positive trade balance, strong industry, and high export volumes, but also high economic growth rates, which are much easier to achieve with low interest rates. And low rates from the central bank have always meant a decline in demand for that country's currency. Consequently, 2026 may become the "final battle between Trump and the Fed."

Wave Analysis for EUR/USD:

Based on the conducted analysis of EUR/USD, I conclude that the instrument continues to build an upward section of the trend. Over the last few months, the market has paused, but Donald Trump's policies and the Federal Reserve's remain significant factors in the future decline of the American currency. The targets of the current trend section may extend to the 25th figure. Currently, construction of corrective wave 4 continues, taking on a highly complex, elongated form. Its latest internal structure—a-b-c-d-e—is close to completion or has already been completed. Therefore, I am once again considering long positions with targets set around the 19th figure.

Wave Analysis for GBP/USD:

The wave picture for the GBP/USD instrument has changed. We are still dealing with an upward, impulsive section of the trend, but its internal wave structure is becoming more complex. Wave 4 has taken a three-wave form, and its structure appears to be very elongated. The bearish corrective structure a-b-c-d-e in c in 4 is presumably nearing completion. I expect the main wave structure to resume building with initial targets around the 38 and 40 figures.

Key Principles of My Analysis:

Wave structures should be simple and understandable. Complex structures are difficult to trade, as they often lead to changes.
If there is no confidence in what is happening in the market, it is better not to enter it.
There is never 100% certainty in the direction of movement. Always remember to use protective stop-loss orders.
Wave analysis can be combined with other types of analysis and trading strategies.

The material has been provided by InstaForex Company - www.instaforex.com