As featured on Forbes Advisor

🕒 Market Overview: In February 2026, the case for a falling dollar index is more compelling than the case for a recovery.

📈 Sector Insight: The trend in the dollar index is lower. If the index falls to challenge critical technical support near the 90 level over the coming months, the $19 UDN call option is an inexpensive way to participate on the downside.

💡 Today's Trade Idea: Bull Call Option on the bearish dollar index ETF, UDN.

SMART TRADE IDEA 💡

Bull Call Option on the
bearish dollar index ETF, UDN

Trade Setup: Buy $19 Call September 18, 2026, expiration.

Cost: $0.40 or lower ($40 per option)

Max Profit: Unlimited
Breakeven: $19.40 on UDN on September 18, 2026
Risk-reward: 1:2.0

Management Plan: Take profits or roll up to a higher strike price option on UDN if the dollar index falls to critical support near the 90 level before September 18, 2026.

NOTE: Remember, options trading involves substantial risk and is not suitable for all investors. Consider your investment objectives, financial resources, and experience level before implementing this or any options strategy.

DISCLOSURE: Trade recommendations may have changed since publication. Evaluate current market prices and risk/reward before acting. Trading involves significant risk and is not suitable for everyone. This is not personalized investment advice. Past performance doesn't guarantee future results. Publisher and contributors may hold positions in recommended securities. Readers assume full responsibility for their trading decisions. Consult a financial professional before investing.

How to Profit from the U.S. Dollar’s Demise

There are many signs that fiat currency values are falling, perhaps plunging. In 2025, gold and silver, the world’s oldest means of exchange that were around long before there were currencies, rose by over 64% and over 141%, respectively. After closing 2025 at $4,341.10 and $70.603 per ounce, gold and silver continued to rise to new record highs in early 2026, reaching $5,626.80 and $121.785 per ounce on January 29 before correcting. While prices experienced dramatic corrections, the lows were higher than those at the end of 2025, keeping the bullish trend intact.

Central banks have been loading up on gold for years, replacing the euro as the second-leading reserve currency in 2025 and threatening the U.S. dollar’s position as the top reserve currency. The bottom line is that the dollar’s preeminence as the world’s top currency is in jeopardy as gold is now the asset of choice for central banks, governments, monetary authorities, and even supranational institutions.

The value of fiat currencies derives from the full faith and credit of the countries that issue legal tender. The 2020 global pandemic caused a flood of liquidity and fiat currency printing, significantly impacting purchasing power over the past few years. The fundamental case for the dollar and fiat currencies has weakened. Moreover, the trend in the U.S. dollar’s value against other fiat currencies has turned lower. The U.S. dollar index measures the dollar’s value against a basket of fiat currencies, with the euro accounting for the largest exposure (57.6%).

Source: Barchart

The chart, dating back to the 1960s, highlights the bearish trend of lower highs and lower lows in the dollar index since 1985. Meanwhile, the index has made higher lows and higher highs since its 2008 low.

The case for a falling dollar index

The bifurcation of the world’s nuclear powers has caused increased uncertainty in the geopolitical and economic landscapes. Sanctions and tariffs have led U.S. trading partners to avoid exposure to U.S. government assets, including U.S. sovereign bonds and the dollar.

Meanwhile, prospects for lower U.S. short-term interest rates in 2026 will likely weigh on the dollar index, as rate differentials are typically a leading factor in the path of least resistance for one currency versus another. Lower short-term U.S. interest rates reduce the dollar’s yield for holders.

Continued strength in precious metals, which are a hybrid of commodities and currencies, signals weakness in fiat foreign exchange instruments, of which the U.S. dollar is the leader.

The trend in the dollar index since the 114.78 high in 2022 remains bearish, with the index below the 98 level in early February 2026.

Over centuries, the world’s reserve currency has typically held the position for a century. The dollar has been the world’s reserve currency for just over 100 years, suggesting its term is nearing an end.

The bullish factors for the index

History shows that the U.S. dollar index tends to rally during periods of turmoil. The ongoing war in Ukraine, tensions in the Middle East, and tensions over Taiwan could trigger a sudden dollar rally if hostilities escalate.

The dollar index’s trend since 2008 has been bullish, with critical technical support at the Q1 2021 low of 89.20.

A compelling case for a challenge of critical technical support

At 97.60, the dollar index has an 8.6% downside potential before it challenges its critical technical support level. A decline below 89.20 could lead to a substantial move as the next technical support levels are at the Q1 2018 low of 88.25 and the Q2 2014 low of 78.90.

In February 2026, the case for a falling dollar index is more compelling than the case for a recovery. The Invesco DB U.S. Dollar Bearish -1X Fund (UDN) is a liquid ETF product that appreciates as the U.S. dollar index declines. At $18.40 per share, UDN had $134.762 million in assets under management. UDB trades an average of 339,962 shares per day and charges a 0.77% management fee.

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