I recently came across an interesting perspective — analysts at Mitsubishi UFJ Bank openly stated: don’t underestimate the Fed’s rate cuts this year; the magnitude could be even more aggressive than you think, which means the dollar will continue to depreciate.

This judgment is not baseless. Just look at Fed Chair Powell’s latest remarks: since April, the monthly job creation data in the US may have been overstated by about 60,000 jobs. In other words, the actual employment growth isn’t as strong as it appears.

But there’s a contradiction here — on the surface, employment data still looks okay, but in reality, the US is quietly losing job opportunities. In an environment where monetary policy remains tight, the market tends to overestimate signals of economic improvement, which is common.

Another factor not to be ignored is the increasing political pressure demanding the Fed to accelerate rate cuts, with some even questioning the Fed’s independence. This pressure could indirectly increase the likelihood of rate cuts.

Based on these factors, Mitsubishi UFJ has made a bold prediction: by Q4 2026, the EUR/USD exchange rate could rise from the current 1.1690 to 1.24. This indicates a weakening of the dollar and an appreciation of the euro.

The reason this outlook is worth paying attention to is that the strength or weakness of the dollar directly influences the pricing logic of global assets. If the Fed actually cuts rates more aggressively than expected, the forex market will react immediately, and this volatility will eventually transmit to the digital asset market. Every move by the Fed from now on is likely to be closely watched.