This is Cambridge Currencies’ view on the dollar for the next six months, to March 2027, rebuilt after the Federal Reserve’s September decision and projections. For the calendar year ahead, see our separate US dollar forecast for 2027.
US dollar forecast 2026 at a glance
| Indicator | Latest | Source |
|---|---|---|
| Dollar index (DXY) | About 101.0 on 25 September, up from 98.6 on 9 September | Our calculation from ECB reference rates |
| GBP/USD | 1.3252 on 25 September | ECB reference rates |
| EUR/USD | 1.1403 on 25 September | ECB reference rates |
| Federal funds target | 3.75–4.00%, raised 16 September on a 12–0 vote | Federal Reserve |
| Fed projection for rates | 4.1% at end-2026 and end-2027; 3.9% at end-2028 | Federal Reserve |
| US payrolls (August) | +162,000; unemployment 4.1% | BLS |
| US CPI (August) | 3.4% headline, 2.4% core | BLS |
| US PCE (July) | 3.7% headline, 3.3% core | BEA |
| Bank of England Bank Rate | 3.75%, held 17 September on a 6–3 vote | Bank of England |
| ECB deposit rate | 2.50%, raised 10 September | European Central Bank |
Will the US dollar go up or down in 2026?
The dollar is more likely to hold its ground or firm further over the rest of 2026 than to fall. The main argument for a weaker dollar was that the Federal Reserve would cut rates. On 16 September it raised them instead, and its projections now show no cuts until 2028.
A dollar forecast is really a forecast of where US interest rates go relative to everyone else’s. The Fed has moved, but so have the ECB and possibly the Bank of England next. That is why our ranges stay two-sided, rather than pointing to a sustained dollar rally.
Is the US dollar getting stronger or weaker?
Stronger. On our calculation from ECB reference rates, the dollar index rose from 98.61 on 9 September to 100.98 on 25 September, a 2.4% gain in just over two weeks. Over the same period GBP/USD fell from about 1.36 to 1.3252.
Measured over 2026 as a whole the move is smaller. The index is up 2.6% since 2 January, and the dollar has gained 1.4% against the pound and 2.7% against the euro. The September rise has taken the dollar back to the top of its 2026 range, not beyond it. Our US dollar index forecast tracks the DXY month by month.
Why did the Federal Reserve raise rates in September 2026?
On 16 September the FOMC raised its target range by a quarter point to 3.75–4.00%, unanimously, saying “Inflation remains elevated” and that the move “will support a timelier return to the Committee’s 2 percent goal”. Two pieces of data explain why a rise, not a cut, came first.
The labour market was stronger than first reported. Payrolls rose 162,000 in August, and July was revised from a fall of 23,000 to a gain of 21,000. The weak summer that most rate-cut forecasts rested on was revised away.
The Fed’s preferred inflation measure is running hotter than CPI. Core CPI was 2.4% in August, which looks close to target. But the Fed targets PCE inflation, and core PCE was 3.3% in July. Anyone forecasting from core CPI was working from a number almost a full point below the one in front of the committee.
What do the Fed’s September projections mean for the dollar?
The Fed’s median projections put the federal funds rate at 4.1% at the end of 2026 and 4.1% at the end of 2027. From today’s 3.875% midpoint, that implies one more quarter-point rise this year and then a plateau, not a peak followed by cuts.
The same projections have PCE inflation falling from 3.7% in 2026 to 2.3% in 2027. If rates stay at 4.1% while inflation falls, the real interest rate rises from about 0.4% to about 1.8% without any further rise. Rising real rates tend to support a currency. That is the single most important reason we no longer expect the dollar to weaken meaningfully into early 2027.
US dollar forecast for the next 6 months: month-by-month ranges
These are the ranges Cambridge Currencies is working to through to March 2027. The top of each DXY range reflects the Fed delivering the extra rise its projections imply while other central banks pause. The bottom reflects the ECB or Bank of England tightening while the Fed holds. GBP/USD and EUR/USD broadly move the opposite way to the DXY.
| Month | DXY range | GBP/USD range | EUR/USD range |
|---|---|---|---|
| October 2026 | 99–102.5 | 1.31–1.36 | 1.12–1.17 |
| November 2026 | 99–102.5 | 1.31–1.37 | 1.12–1.17 |
| December 2026 | 98.5–103 | 1.31–1.37 | 1.11–1.18 |
| January 2027 | 98–103 | 1.30–1.38 | 1.11–1.19 |
| February 2027 | 98–103 | 1.29–1.38 | 1.11–1.19 |
| March 2027 | 98–103 | 1.29–1.38 | 1.11–1.19 |
Cambridge Currencies’ forecast ranges as at 25 September 2026. They are not guarantees, and rates may move outside them. The DXY is our calculation using ICE’s published formula applied to ECB reference rates.
Each pair has its own page with the detail behind it. The pound to dollar forecast covers GBP/USD in full, and the euro to dollar forecast covers the pair that carries 57.6% of the dollar index. For the week ahead, see the weekly dollar forecast.
When will the US dollar go up again?
The dollar has already gone up. It rose 2.4% on the index in the fortnight around the Fed’s September rise. The next scheduled points at which it could move again are:
- 27–28 October: Federal Reserve, followed by the ECB on 28–29 October
- 5 November: Bank of England, with its Monetary Policy Report
- 8–9 December: Federal Reserve, with new projections
- 16–17 December: ECB, and the Bank of England on 17 December
There is a trap in the question, though. Markets price expected decisions before they happen, so by the time a rate change is announced the dollar has usually moved already. Waiting for a scheduled event to “go your way” often means waiting for something that has already happened. What moves the rate is the gap between what is priced and what is delivered.
Will the US dollar get stronger in 2026?
It could firm further, but a sustained move above the DXY 103 area would need the Fed to tighten while everyone else stands still. That is where the argument usually falls down.
A hawkish Federal Reserve only strengthens the dollar if the other central banks are not hawkish too. The ECB raised its deposit rate to 2.50% on 10 September, a week before the Fed moved, so the rate gap with the euro did not change at all. At the Bank of England, three of nine policymakers voted to raise Bank Rate to 4% on 17 September. If they win the argument in November, the pound regains ground.
GBP/USD forecast: what the Fed rise means for the pound
For the first time this year, US rates sit above UK rates. The midpoint of the Fed’s 3.75–4.00% range is 3.875%, against a Bank Rate of 3.75%. Since 9 September, GBP/USD has fallen from about 1.36 to 1.3252 on 25 September. Check the live GBP to USD rate before acting on any figure here.
We expect GBP/USD between 1.29 and 1.38 over the next six months. The pound’s route back toward the top of that range runs through the Bank of England on 5 November; see the next Bank of England interest rate decision.
EUR/USD forecast: why the euro has gone nowhere
EUR/USD fixed at 1.1403 on 25 September, almost exactly its July level. Both the ECB and the Fed raised rates by a quarter point in September, which left the gap between them unchanged at 1.375 points. ECB staff project euro area core inflation rising to 2.6% in 2027, which keeps another ECB rise possible and is the euro’s main route higher. We expect EUR/USD between 1.11 and 1.19 over six months.
Will the dollar go up against the Turkish lira, the rupee and other currencies?
Against many emerging-market currencies the dollar has risen far more in 2026 than against the pound or euro. These are the moves from 2 January to 25 September 2026, on ECB reference rates:
| 1 US dollar buys | 2 Jan 2026 | 25 Sep 2026 | Dollar in 2026 |
|---|---|---|---|
| Turkish lira | 43.03 | 48.93 | +13.7% |
| Indonesian rupiah | 16,716 | 17,914 | +7.2% |
| Indian rupee | 90.20 | 95.82 | +6.2% |
| Canadian dollar | 1.3733 | 1.4143 | +3.0% |
| Chinese yuan | 6.9937 | 6.7132 | −4.0% |
Currencies of countries with inflation well above US levels tend to lose ground to the dollar over time, which is the pattern behind the lira’s fall. We do not publish forecasts for the lira. For the rupee, see our USD to INR forecast.
What is the US dollar forecast for the next 5 years?
No forecaster produces a five-year exchange rate projection precise enough to plan a transfer around. A six-month range is a judgement about the interest rate cycle; a five-year range is a judgement about elections, trade policy and shocks nobody has thought of yet.
What can be said is structural. The dollar is the world’s dominant reserve currency, which limits how far and how fast it moves. Over multi-year periods it has tended to weaken when US real interest rates fall relative to the rest of the world, and to strengthen when they rise. On the Fed’s current projections, US real rates rise into 2027.
For anyone with a long horizon, such as a pension paid in dollars or a US property held for years, the practical response is to reduce the timing decision rather than predict it. Forward contracts run up to twelve months ahead, so a five-year plan is really a sequence of shorter ones.
Is the US dollar going to crash in 2026?
A crash is not a realistic base case, and the Fed’s September rise makes it less likely, not more. The dollar has risen, not fallen, since the decision. It clears trillions of dollars a day and underpins global reserves, so it does not move like a share price. Our six-month DXY range is about five points wide, roughly 5%.
What does the dollar forecast mean for your transfer?
On a large transfer, the dollar’s direction is worth more than any fee you will be quoted. Take a buyer converting sterling into $200,000:
| Illustrative GBP/USD rate | Sterling cost of $200,000 | Difference vs 1.33 |
|---|---|---|
| 1.29 | £155,039 | £4,663 more |
| 1.33 | £150,376 | — |
| 1.38 | £144,928 | £5,448 less |
Across our six-month range, the sterling cost of $200,000 varies by about £10,100. Set against that, the spread you pay is the part you can control. High street banks typically build in a 3–4% margin on the interbank rate, while a specialist broker generally works on 0.2–1%.
How to manage dollar risk before the October decisions
- Fix the rate. A forward contract locks a rate for a future date up to twelve months out. It removes the outcome from the equation, and the upside with it.
- Target a better rate. A market order executes automatically if the rate reaches a level you set.
- Split the amount. Converting in tranches averages your rate. It guarantees you will not get the best rate, and guarantees you will not get the worst.
Which fits depends on how firm your deadline is. The costliest mistake is holding out for a rate that never arrives while a deadline closes in. Our guide on whether to buy US dollars now works through that decision.
Frequently asked questions
What is the US dollar forecast for the next 6 months?
Cambridge Currencies expects the dollar index to trade between 98 and 103 over the next six months, with GBP/USD between 1.29 and 1.38 and EUR/USD between 1.11 and 1.19. The Fed’s projection of no rate cuts through 2027 supports the dollar. Further ECB or Bank of England rises are the main risk to it.
What is the USD prediction for 2026?
For the rest of 2026 we expect the dollar index between 98.5 and 103, GBP/USD between 1.31 and 1.37, and EUR/USD between 1.11 and 1.18 by December. On our calculation, the DXY was about 101.0 on 25 September.
Is the US dollar getting stronger?
Yes. The dollar index rose 2.4% between 9 and 25 September on our calculation, a period spanning the Fed’s rate rise on 16 September. It is up 2.6% in 2026 as a whole.
Will the dollar rate increase in the next few weeks?
The next scheduled tests are the Fed on 27–28 October, the ECB on 28–29 October and the Bank of England on 5 November. Much of the Fed’s hawkish shift is already in the price, so the reaction will depend on what is delivered against what is expected. Our next Federal Reserve decision page tracks the Fed.
Will the Fed raise interest rates again in 2026?
The Fed’s September median projects the federal funds rate at 4.1% at the end of 2026, which implies one more quarter-point rise from the current 3.75–4.00% range. The remaining 2026 meetings are 27–28 October and 8–9 December.
Why is US core PCE inflation higher than core CPI?
In July 2026, core PCE was 3.3% while core CPI was 2.5%. The two indices weight housing, healthcare and financial services differently. It matters for the dollar because the Fed’s 2% target is set against PCE, so PCE is the number that drives policy.
Should I buy US dollars now or wait?
That depends on your deadline rather than the forecast. If you have a fixed commitment, a forward contract removes the uncertainty; if your timing is flexible, a market order or splitting the amount spreads the risk. A specialist can talk through which fits your situation.
Have a dollar payment landing around the October Fed and ECB decisions? Talk the timing through with a Cambridge Currencies specialist. Whether you are settling a US property purchase, paying a dollar invoice or bringing sale proceeds back to sterling, request a free quote. Every transfer is handled by phone with a dedicated specialist who knows your deadline. Cambridge Currencies operates through FCA-authorised partners Currencycloud (FRN 900199) and ScioPay (FRN 927951).
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