Market focus on 2026
One of the most important factors affecting the US Dollar and overall risk sentiment has been rising trade tensions and tariff-related headlines. According to FXStreet (citing Reuters), the European Union has reached a broad agreement on a retaliatory tariff package targeting US imports. This type of development typically pushes the market into a more cautious “risk-off” mood and can directly impact capital flows and the USD.
A highly sensitive driver for the dollar has been political concerns related to the independence of the Federal Reserve. Recent analysis on FXStreet highlighted this as a potential pressure point for the USD, since it can weaken market confidence in US monetary policy and negatively affect the Dollar Index.
One of the strongest drivers in forex is interest-rate expectations. The Fed Rate Monitor tool (Investing) indicates that the market remains highly sensitive to the Fed’s direction and the possibility of rate cuts going into 2026, since this directly affects USD yields and overall demand for the dollar.
Some market coverage also pointed to increased demand for safe-haven assets such as gold, while the US Dollar remained under pressure. This type of environment often leads to stronger volatility across major FX pairs.
The main USD drivers today / recently have been:
Tariff tensions and trade-war risk
Concerns around Federal Reserve independence
Direction of interest-rate expectations for 2026
Increased safe-haven demand and DXY volatility