Overview
- The U.S. dollar fell about 9% in 2025, its worst year since 2017, then steadied into year-end after a modest rebound from September lows.
- Analysts broadly expect further weakness in 2026 with one or two additional Fed cuts forecast, while CME FedWatch shows a high probability of no change in January supporting near-term stability.
- Investors cite improving prospects in Germany, China and the eurozone as narrowing the U.S. growth premium and adding downward pressure on the currency.
- Fed leadership is a wildcard as Jerome Powell’s term ends in May and President Trump is expected to select a successor viewed as more rate-friendly.
- Gold hit records above $4,549 per ounce as central banks added to reserves, while AI-driven equity inflows and recent U.S. fiscal measures could fuel intermittent dollar rebounds.