Crédit Mutuel Asset Management is an asset management company of Groupe La Française, the holding company of the asset management business line of Credit Mutuel Alliance Fédérale.
Before exploring where the dollar might be headed, we first need to analyze the reasons behind the decline of the currency over the past 12 months. Economic theory tells us that exchange‑rate movements are driven by different factors, and that the importance of these factors varies over time. This explains why it is difficult to generate stable and robust performance when investing solely in currencies.
However, not all factors carry the same weight or have the same predictive power. From our perspective, the most reliable indicator is the spread between short‑term real interest rates (adjusted for inflation). When we run a trend analysis between the 2‑year real interest rate spread (U.S. vs. Eurozone) and currency movements over the past five years, the data reveals a clear and strong correlation.
Source Bloomberg, 10/02/2026. Historical market trends are not a reliable indicator of future market behavior. This data is provided for illustration purposes only. Depending on the publication date, the information presented may differ from updated data.
Are there instances when the data departs from real-rate expectations? Yes, and these deviations are often driven by political, monetary or other external events. This is exactly what occurred during Trump’s election, when the dollar surged, and later during the post–Liberation Day period, when it weakened markedly.
However, all of this is ultimately just noise around the underlying trend suggested by the real‑rate differential. In 2025, U.S. 2‑year real rates fell from 1.68% to 1.15%, while Eurozone real rates increased from 0.28% to 0.60%. As a result, euro‑denominated returns improved as dollar‑denominated returns weakened. This narrowing of the real‑rate spread from 140 basis points (bps) to 55 bps translated into the euro appreciating from 1.10 to 1.15 against the dollar, a coherent outcome. (Source: Bloomberg)
In 2026, we expect U.S. short‑term real interest rates to continue declining, while Eurozone short‑term real rates should remain stable. This should lead to a further depreciation of the dollar against the euro in 2026, although less pronounced than over the past 12 months.
Completed February 10, 2026. This commentary is provided for information purposes only. The opinions expressed by Crédit Mutuel Asset Management are based on current market conditions and are subject to change without notice. The information contained in this publication is based on sources considered reliable, but the La Française group does not guarantee that it is accurate, complete, valid, or relevant. Published by La Française Finance Services, head office located at 128 boulevard Raspail, 75006 Paris, France, a company regulated by the Autorité de Contrôle Prudentiel as an investment services provider, no. 18673, and registered with ORIAS (www.orias.fr) under number 13007808 on 4 November 2016 is a subsidiary of La Française. Crédit Mutuel Asset Management: 128 Boulevard Raspail, 75006 Paris is an asset management company approved by the Autorité des marchés financiers under n° GP 97 138 and registered with ORIAS (www.orias.fr) under no. 25003045 since 11/04/2025. Public Limited Company (Société Anonyme) with share capital of €3,871,680, RCS Paris n° 388 555 021.
