The dollar’s vulnerability stems from the large and ongoing U.S. current account deficit, which necessitates substantial foreign investment to maintain its value. However, waning investor appetite for dollar-denominated assets increases downward pressure. Some analysts predict a continued decline in the dollar’s value, while others anticipate periods of stabilization followed by further depreciation.

Geopolitical tensions and fluctuating oil prices add complexity to the outlook. Increased risk aversion could trigger a flight to safety, temporarily boosting the dollar, but such rallies are likely to be short-lived. The long-term trajectory remains tied to addressing the fundamental imbalances in the global economy.

Central bank policies will also play a crucial role. Intervention by foreign central banks to support the dollar could provide temporary relief, but sustained intervention is unlikely. Ultimately, the dollar’s fate hinges on a rebalancing of global trade and investment flows.