2026-01-02 13:25:55

The dollar will not have a good time in 2025. The Bloomberg dollar spot index fell about 8% for the year, the worst annual decline since 2017. The logic behind this is not complicated - the market is betting that the dollar will continue to weaken.

The key turning point came in April. After US President Donald Trump announced tariffs, the dollar fell sharply and has not rebounded since. Why? A significant reason is the widespread expectation that Trump will appoint a dovish person to replace current Fed Chair Powell. How important is this expectation? Yusuke Miyairi, a foreign exchange strategist at Nomura Securities, bluntly said that the biggest factor affecting the trend of the dollar in the first quarter was the Federal Reserve, including the two policy meetings in January and March, as well as who will take over after Powell leaves office.

From a policy perspective, the policy paths of the United States and other advanced economies are clearly different. The market generally expects the Fed to cut interest rates at least twice next year, which weakens the attractiveness of the dollar. This is confirmed by data released by the US Commodity Futures Trading Commission - traders increased their short bets on the dollar in the week ending December 23. The options market suggests that the dollar will weaken further in January and ease in the following months.

Another driver is the euro. Moderate inflation combined with an upcoming wave of European defense spending, making it almost unlikely that a rate cut in the eurozone is expected, which has driven the EURUSD pair up sharply. The situation is similar in Canada, Sweden and other countries, with the dollar under pressure on several currency pairs.

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GasFeeCrybaby

· 01-05 09:31

The US dollar is really struggling this time. As soon as the rate cut expectation emerged, everything was over... Basically, the dovish succession expectation directly shattered the dollar's foundation.

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BearMarketGardener

· 01-05 00:57

The US dollar has really taken a hit. Now, the story between the Federal Reserve and Trump is the key.

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MerkleDreamer

· 01-02 13:55

The US dollar has really taken a hit this time, with an 8% decline that’s hard to withstand. The key factor is still the Federal Reserve; as soon as the dovish stance comes, the dollar has to accept defeat…

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MainnetDelayedAgain

· 01-02 13:46

According to the database, the USD delay notice has lasted for 8 years this time, and the last major decline in 2017 has become a historical event. It is recommended to be included in the Guinness World Records.

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hodl_therapist

· 01-02 13:40

The dollar is really suffering this time, with an 8% decline, which is quite remarkable. But honestly, the real key is the change in the Federal Reserve leadership... When dovish officials take office, how can the dollar possibly stay strong? --- Trump raising tariffs causes the dollar to plummet; this logic is a bit ironic haha. --- When the euro rises, the dollar has to give way, which is very normal. --- With such strong expectations of rate cuts, do you still want the dollar to appreciate? Dream on. --- It feels like the next Federal Reserve chairperson choice will be the decisive factor, truly. --- The bulls have directly surrendered... the bears are making a killing this wave. --- 8%! If it weren’t for Powell stepping down, it might have been even worse.

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AirdropDreamBreaker

· 01-02 13:38

This wave of the US dollar is about to end. Trump and tariffs directly knocked it down, and it hasn't recovered since... Two rate cuts? Then the dollar will fall even more. No one wants a devalued currency. The euro is soaring directly; the dollar is truly becoming the sunset of the old empire. When Powell suddenly shifts to a dovish stance, the market gets excited. The dollar needs to take a breather. Shorts are piled up into mountains. Can it rebound? Dream on. These tariff policies are really suicidal, deliberately ruining the US dollar.

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LightningPacketLoss

· 01-02 13:36

The US dollar has really underperformed this year, with a direct 8% decline... No wonder my USD assets are shrinking. The expectation of interest rate cuts is a double-edged sword; once the Federal Reserve loosens, nobody wants the dollar anymore. The key issue is still Powell stepping down—whether the new chair will be more dovish, that's the real concern for traders. The euro has managed to rise solely on defense spending, which is indeed a bit desperate.

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PancakeFlippa

· 01-02 13:29

The USD bear market is so obvious that as soon as the Fed's rate cut expectations emerged, it was doomed. Once the dovish successor was chosen, there was no turning back.

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