US Dollar Strengthens as Dollar Smile Returns. Forecast as of 29.09.2026

Even if the Fed tightens monetary policy so aggressively that the US economy enters a recession, the US dollar may still find support. According to the Dollar Smile Theory, the greenback can strengthen anyway. Let's examine the situation and develop a trading plan for the EUR/USD.Major Takeaways A yield curve inversion is approaching. The market expects the Fed to raise rates to 4.75%. Oil prices are holding steady despite rising supply. Short trades can be opened with targets of 1.13 and 1.12.W