USD: The Year 2026 Will Continue the Trends of 2025

[Ben Graham]

In 2025, the U.S. dollar lost about 9% against a major basket of currencies. To be honest, 9% is significant, but the dollar was fortunate that it did not end up in a much worse position. Against the euro, the decline was 15%, and against the British pound, it was 10%. In the second half of the current year, the market managed to stabilize the situation for the dollar somewhat, but what can be expected next year?

In my opinion, the depreciation of the U.S. currency will continue. I believe that the news background remains negative for the dollar, so the market will continue to sell. The year 2025 has shown us that we should not expect monthly crashes from what was once considered a "safe haven," but the dollar can no longer claim stability. Even central banks around the world have begun to reduce their dollar reserves, which speaks volumes.

The dollar is currently a politically unstable currency with an entirely uncertain future. In 2025, Donald Trump initiated a Global World War, and what the American president will come up with in 2026 is known only to him. However, Washington is already prepared to start a full-scale war against Venezuela, and in this case, the dollar is unlikely to act as a "safe-haven asset" for market participants. The trade war will continue in one form or another, as Trump views it as a means to eliminate the budget deficit. By February 1, America could face another shutdown, as Republicans and Democrats only agreed to funding until that date in November.

Democrats demand the removal of any cuts to healthcare and social programs from the budget, while Trump refuses to change anything in his "One Big, Beautiful Bill." Therefore, the budget has been patched together, but it is not a real solution to the problem. Consequently, we could see a new shutdown at the beginning of next year. Each subsequent shutdown under Trump sets a record for duration, so the prospects for February do not look promising.

Wave Analysis for EUR/USD:

Based on my analysis of EUR/USD, I conclude that the instrument continues to develop an upward trend segment. Donald Trump's policies and the Federal Reserve's monetary policy remain significant factors in the long-term decline of the U.S. currency. The targets for the current trend segment could extend up to the 25th figure. The current upward wave collection is beginning to develop, and I hope we are currently witnessing the formation of an impulse wave collection, which is part of the global wave 5. In this case, we should expect growth with targets around 1.1825 and 1.1926, corresponding to 200.0% and 261.8% on the Fibonacci scale.

Wave Analysis for GBP/USD:

The wave structure for GBP/USD has changed. The downward corrective structure a-b-c-d-e in C at 4 appears to be complete, as does the entire wave 4. If this is indeed the case, I expect the main trend segment to resume construction, with initial targets around the 38 and 40 levels.

In the short term, I anticipated the formation of wave 3 or C with targets around 1.3280 and 1.3360, which equates to 76.4% and 61.8% on the Fibonacci scale. These targets have been reached. Wave 3 or C continues its formation, and there is currently a fourth attempt to break the 1.3450 mark, which corresponds to 61.8% on the Fibonacci scale.

Key Principles of My Analysis:

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often lead to changes.
2. If there is no confidence in what is happening in the market, it is better not to enter it.
3. There can never be 100% certainty in market direction. Do not forget to use protective stop-loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.

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