**US Dollar Price Action Setups Into 2026: EUR/USD, GBP/USD, USD/JPY**
*Original author: James Stanley, Forex.com*
The US Dollar has been on an eventful journey, driven by the Federal Reserve’s aggressive rate hiking cycle, economic resilience, and geopolitical turbulence. As we move closer to 2026, traders and analysts are scrutinizing the greenback’s trajectory against its major peers, specifically the euro (EUR), British pound (GBP), and Japanese yen (JPY).
Understanding where the US Dollar might be headed over the next couple of years requires a blend of technical analysis, macroeconomic insight, and a reading of the ever-changing monetary policy stances across the globe.
This article delivers a comprehensive look at the US Dollar’s future, focusing on three of its key currency pairs: EUR/USD, GBP/USD, and USD/JPY. Insights are derived both from recent price action and the global economic context, ensuring traders are equipped to anticipate critical moves up to 2026.
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## The US Dollar’s Macro Backdrop
Recent years have seen the US Dollar surge as the Federal Reserve led global central banks in tightening monetary policy. The combination of:
– Persistent inflation
– Solid growth in the US economy
– Global uncertainties surrounding supply chains and geopolitics
has contributed to a risk-off environment where the dollar often acts as a safe haven.
Despite growing expectations of rate cuts into 2025 and possibly 2026, the dollar’s relative strength has persisted. Several drivers are at play:
– The delayed start of rate cutting from the Fed compared to other central banks
– Continued US economic outperformance versus Europe and Japan
– Investor caution amid uncertainties with global trade, energy, and politics
With these themes likely to persist, the greenback’s direction into 2026 will depend on how divergences in monetary policy, growth, and inflation play out.
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## EUR/USD: Navigating a Fragile Rebound
The EUR/USD pair has experienced significant volatility, buffeted by diverging macroeconomic performances and central bank signals.
### 1. Technical Outlook
– EUR/USD hit a multi-year low below 0.96 in September 2022 before bouncing as the European Central Bank moved toward normalization.
– Most of 2023 and early 2024 saw the pair range-bound between 1.05 and 1.12, reflecting uncertainty about the trajectory of each economy.
– Weekly and monthly charts point to a broad consolidation zone, with support near 1.05 and resistance just above 1.12.
**Key Chart Patterns:**
– Descending channel from 2021 highs, with lower highs and higher lows forming a wedge pattern.
– Failing to break above the 1.12 zone may signal a continuation of the long-term bearish trend.
### 2. Macro Drivers
– The European Central Bank remains cautious, as growth and inflation struggle to pick up pace.
– Divergence in rate paths could re-emerge if the US proves more resilient than the EU, especially if the Fed delays cuts or the ECB moves more aggressively.
– Geopolitical factors, such as energy supply uncertainties and the ongoing conflict in Ukraine, continue to weigh on euro sentiment.
### 3. Scenarios Into 2026
– A confirmed break below 1.05 could bring the 1.02 zone into view, and a revisit to parity is not off the table, especially in a dollar-liquid crunch or eurozone recession.
– On the upside, recapturing and sustaining 1.12 would be required to flip the broader bias and target 1.15/1.18, last seen pre-2022.
_Bullet points for trading considerations:_
– Watch ECB vs. Fed rate expectations for short-term volatility.
– Monitor economic data divergences: US jobs, Eurozone PMIs, inflation rates.
– Risk events from energy markets or escalating regional tensions could trigger
Read more on GBP/USD trading.