Overview

• The U.S. Dollar Index has declined over 10% since mid-January and is approaching its weakest level since 2023 on growing Federal Reserve rate-cut expectations
• Morgan Stanley forecasts the index will fall 9% to around 91 in the next 12 months, matching pandemic-era lows, and JPMorgan Chase maintains bearish calls on the greenback
• FX options flows reveal elevated demand for dollar put options, with put volumes comprising nearly 60% of FX trades as investors brace for further losses
• Goldman Sachs strategists estimate the dollar is roughly 15% overvalued and predict additional declines driven by global asset reallocation
• Alternative currencies are gaining ground, with the euro near $1.145 and projected to reach $1.25 by mid-2026 and similar strength expected for the yen and sterling