• The U.S. dollar is expected to keep rising in the second half of 2026, supported by strong economic growth and higher interest rates, according to Societe Generale.
  • The DXY index could climb to 103.6 by year-end, while the euro may weaken to $1.11.
  • Robust U.S. growth may keep inflation above target, limiting pressure for rate cuts.

The U.S. dollar rally may have further to run, with Societe Generale projecting the greenback will strengthen into the second half of 2026. The bank’s latest forecast sees the DXY dollar index reaching 103.6 by year-end, up from current levels, while the euro could slide to around $1.11.

“Strong economic growth in the U.S. is supporting higher interest rates, which in turn is boosting the dollar,” said a Societe Generale analyst. “Inflation staying above target also means the Fed has less room to cut rates, keeping the dollar attractive.”

The forecast underscores a growing divergence between the U.S. and euro-area economies. While the U.S. continues to post solid growth and persistent price pressures, the eurozone is facing slower expansion and weaker inflation, dimming prospects for tighter ECB policy.

Market participants are now closely watching the Federal Reserve’s next moves. A higher-for-longer rate scenario could prolong the dollar’s strength, especially if other major central banks ease policy sooner. The DXY index has already gained about 5% this year, buoyed by resilient U.S. data and a flight to dollar-denominated assets.

“Investors are piling into U.S. Treasuries and equities, drawn by the yield advantage and robust corporate earnings,” noted a currency strategist at a major bank. “As long as the U.S. economy outperforms, the dollar will remain a magnet for capital.”

However, some analysts caution that a rapid shift in global risk sentiment or an unexpected slowdown in U.S. growth could derail the dollar’s ascent. A faster-than-expected easing by the Fed would also weaken support for the currency.

For now, Societe Generale’s call adds to a growing chorus of banks forecasting further dollar gains. The euro’s slide below $1.11 would mark a fresh multiyear low, testing the European Central Bank’s resolve that the single currency’s weakness may fuel imported inflation.

Correction: An earlier version of this article misstated the DXY year-end forecast. It is 103.6, not 102.9.