Westpac Forecasts US Dollar Index Decline Toward Mid-90s by Late 2026

Westpac analysts project a medium-term downtrend for the US dollar, forecasting the US Dollar Index (DXY) to slide toward the mid-90s by late 2026. The bank noted that the dollar's inability to sustain a safe-haven rally despite Middle East tensions suggests that markets have already fully priced in geopolitical risks. According to the report, investors are increasingly looking past energy shocks and anticipating a normalization of global trade flows. Meanwhile, the Chinese Renminbi is showing resilience, supported by diversified energy supplies and its strategic position in global manufacturing. This outlook suggests a shift in market sentiment away from the greenback as global growth prospects begin to take precedence. Overall, Westpac views the current market behavior as a signal that the dollar's period of dominance may be facing a gradual decline.