Trading Insights 1/28/26

Mike Larson | Editor-in-Chief

The greenback is on the brink…again. Will it collapse convincingly to four-year-plus lows?

Take a look at the MoneyShow Chart of the Day, which shows the US Dollar Index (DXY) going back a half-decade. After bouncing off the 96-and-change level in July and September 2025, DXY is threatening to break through it this week. That would extend losses of more than 11% from the early-2025 peak – and open the door for a move all the way down to the 90 area.

US Dollar Index (DXY)

Source: TradingView

Why is the dollar rolling over? You have both short-term and long-term forces at work.

In the short term, Japanese officials have signaled they want the yen to stop weakening against the dollar. They laid the groundwork for a possible joint US-Japan currency market intervention, and that caused traders to rush out of the dollar and into the yen.

Then the Conference Board said its US consumer confidence index plunged to 84.5 in January, the worst level since 2014. Bad economic data is generally bad for a country’s currency, in part because it can prompt monetary policymakers to cut interest rates.

In the long term, the Trump Administration is shaking up US policy, leading global market participants to reassess geopolitical and economic relationships. We’re seeing bouts of “Sell America” trading – where US Treasuries and the US dollar decline – as well as persistent investor diversification into other assets like gold.

If the DXY does break down, you can trade the move directly in the forex market. A breakdown would likely help support precious metals, too. As for equities, it should drive even more outperformance for funds that invest in foreign stocks. The Vanguard FTSE All-World ex US Index Fund ETF (VEU) is up 34.9% in the past 12 months, crushing the 15.3% return of the Vanguard 500 Index Fund (VOO).

So, pay close attention to these levels. The dollar could be a BIG story in 2026!

Irene Aldridge is a recognized quantitative researcher, fund manager, and CEO of two startups. She has previously successfully brought two platforms to market, Able Alpha and Able Markets, both in the financial services space. In her presentation from our MoneyShow Virtual Expo this week, she focuses on an innovative methodology to efficiently "unbox" an AI trading model — critical intelligence for any trader looking to use AI-based tools.

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