The US Dollar Index has transitioned from trending to drifting, flattening out into a consolidation. Earlier last year we saw clear momentum (both upward and downward), but now the range has tightened, and familiar trend channels have flattened. The market looks coiled, as if in a “decision zone” with no breakout or breakdown – just tension building…
The first full trading week of 2026 unfolded with a steady macro backdrop and limited change in central bank expectations. Policy signals across major economies remained broadly consistent with late-December messaging, reinforcing a sense of continuity rather than transition. Inflation trends continue to ease gradually, while growth indicators point to moderation rather than deterioration, keeping investors positioned cautiously but constructively.
The US dollar has entered a stretch of hesitation. Rate expectations are shifting, US data has softened, and global sentiment feels increasingly reactive rather than directional. After a strong surge and a sharp unwind over the past year, the greenback’s chart isn’t giving traders much to latch onto.
After the inflation shock of 2022 and 2023, price pressures have finally started to cool. Inflation has not disappeared, but it has slowed, and that phase is known as disinflation. Prices are still rising, just not at the pace that unsettled households, policymakers, and markets a couple of years ago.
