Bank of America Global Research says that even though the U.S. dollar opened 2026 on a strong note, the balance of risks still points toward further downside.
From a trend perspective, the research shows the dollar started the year in established downtrends against nearly all G10 currencies. The only exceptions were the New Zealand dollar and the Japanese yen. In contrast, bearish continuation signals were specifically triggered against the Australian dollar and the Norwegian krone.
Bank of America also highlighted weakness in U.S. equity markets relative to global peers. According to the firm, American stocks entered 2026 as the poorest performer among G10 equity markets, adding to broader concerns about relative U.S. asset performance.
Analysis of options markets further supports the cautious outlook. Toward the end of 2025, demand increased for U.S. dollar put options versus major G10 currencies. This positioning suggests that traders are preparing for potential dollar depreciation, even as spot prices showed modest gains.
Overall, Bank of America maintains a bearish stance on the dollar. The firm notes that a combination of technical indicators, trend signals, and market positioning continues to signal downside risk for the greenback, despite its recent resilience.
