Luca Paolini, a strategist at Pictet Asset Management, forecasts a decline in the US dollar in 2026 due to anticipated Federal Reserve interest rate cuts. Paolini suggests that slower US economic growth will lead to reduced inflationary pressures, prompting the Fed to lower rates. This, combined with narrowing interest rate differentials, is expected to weaken the dollar. Pictet projects the dollar index will drop from its current level of approximately 99.55 to 95 by the end of 2026. The firm also notes that while the US economy may weaken, economic growth in Europe and Japan is likely to improve, further impacting the dollar's valuation.