The Dollar Keeps Sliding

From Jan 20 to Jan 29, 2026, public market reporting described a weaker U.S. dollar with sharp day-to-day swings. On Jan 20, Reuters reported the dollar index fell as much as 0.7% (its biggest one-day drop since mid-December) as the euro rose to about $1.1711 and U.S. stocks and Treasuries also fell in that session.

By Jan 26, Reuters said the dollar was “headed for its biggest three-day slide” against a basket of major currencies since April, in a stretch tied in news coverage to changing U.S. policy signals and geopolitics.

On Jan 28, Reuters reported the dollar index had dropped to 95.86 the prior day (its weakest since Feb 2022) and then rebounded after the Fed kept rates unchanged; the index was up 0.8% near 96.667. Reuters also noted the earlier weakness was “exacerbated” by comments that appeared to show comfort with the slide.

On Jan 29, Reuters had the euro around $1.19655 and the yen near 153.185 per dollar, with investors still “jittery” about U.S. policy even after the Fed decision. Public price pages for the ICE U.S. Dollar Index show closes near 95.97 on Jan 28 and 96.16 on Jan 29.

A multi-day FX move often looks like one big opinion. It can also reflect routine institutional “plumbing” that reacts to price moves.

Re-marking portfolios. Many firms revalue positions every day. If the dollar falls for several sessions, global holdings look different in each home currency. That daily re-marking can lead to small, repeated adjustments across large books.

Currency hedges resetting. A hedge is a contract meant to reduce currency swings on overseas assets. When the dollar drops, hedge sizes can change because the asset values they protect have changed. Rebalancing hedges can add extra flow in the same direction as the move.

Risk limits doing their job. Big funds often set limits based on volatility, meaning how bumpy returns are. When FX gets choppy during a window like Jan 20–29, some portfolios may reduce exposure so measured risk stays inside the rules. That is “risk trimming,” and it can happen in steps across several days.

Options hedging. In FX options, dealers who sold options often hedge by trading the spot market. When price moves quickly, those hedges need frequent updating. That can add short bursts of buying or selling that look like momentum.

Liquidity thinning. Liquidity is how easily large trades can be done without moving the price much. In uncertain policy periods, market makers may show less size or quote wider spreads (a bigger gap between buy and sell prices). With less depth, each order can move the market more. Reuters’ late-January coverage repeatedly tied the dollar action to policy uncertainty and mixed messaging, which is consistent with this kind of thinner liquidity.

This framing separates headlines from mechanics. During Jan 20–29, the story changed by the day—tariffs, geopolitics, the Fed, and official comments. But the trading pattern can still look “one-way” if several rule-based processes respond to the same direction at the same time.

It also clarifies why a rebound day does not erase the stress. On Jan 28, the dollar index bounced after the Fed decision, yet news attention stayed on policy signals and confidence. In FX, confidence is often visible in liquidity: how tight prices are and how much size dealers are willing to show.

The Jan 20–29, 2026 dollar slide fits a pattern where daily updates can reinforce a trend. Reporting showed sharp down days, a dip to around 95.86 on the dollar index, and continued sensitivity to policy messaging. When prices travel that far, routine institutional steps—re-marking portfolios, resetting hedges, and enforcing risk limits—can keep pressure in place across multiple sessions, even when the headline of the day changes.