Citigroup published its midyear 2026 outlook on July 15, projecting a decline of the US dollar. The DXY index, which measures the dollar against a basket of major currencies, is expected to fall from 101.82 in Q3 2026 to 99.96 by Q3 2027, dropping below the psychologically important 100 level for the first time in this cycle. The bank also forecasts the Fed Funds rate to reach 3.25% by end of 2026, with the first cut pushed to October rather than September. This bearish outlook is driven by three converging forces: Fed rate cuts, US midterm elections, and US Treasury debt buybacks. The EUR/USD pair is expected to climb toward 1.14, reflecting the dollar’s relative weakening.
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