Overview
- The greenback fell roughly 8% to 9% against a currency basket in 2025, marking its steepest annual decline in eight years.
- Investors anticipate further U.S. dollar weakness this year as the Federal Reserve, which delivered three quarter-point cuts in 2025, is expected to ease again and a new chair with a more dovish tilt is considered possible.
- Short-term support has surfaced as futures pricing points to a high likelihood that rates stay unchanged in January, and some analysts flag potential near-term lifts from AI-linked equity inflows and recent U.S. fiscal developments.
- Strategists cite narrowing U.S. growth and rate advantages as Germany’s stimulus, China’s support measures, and an improving eurozone reduce the U.S. premium, with the ECB seen holding policy steady and inflation dynamics favoring Europe.
- Gold benefited from the weaker dollar, surging above $4,549 per ounce as central banks added to reserves, while BlackRock notes stablecoins could expand dollar use in emerging markets even as traditional demand channels evolve.