FX.co ★ Dollar Set for Sharpest Annual Loss Since 2017

The US dollar steadied at 98.2 on the last trading day of 2025, hovering near its lowest level since the start of October and heading towards its most significant annual drop since 2017. Throughout the year, the dollar experienced a 9.4% decline, reflecting a volatile phase initiated by President Donald Trump’s tumultuous tariff implementations. Factors such as anticipated Federal Reserve rate cuts, narrowing interest rate differentials with other key currencies, and concerns regarding fiscal deficits and the Fed's autonomy have further contributed to the dollar's downturn. Investors are now keenly awaiting the nomination of a new Federal Reserve Chair, with Trump expected to unveil Jerome Powell's successor early in the upcoming year. In the meantime, minutes from the Fed's December session disclosed that most officials consider further interest rate reductions suitably warranted if inflation continues its downward trend, despite differing opinions on the timing and extent of such cuts. Currently, markets are factoring in two quarter-point rate cuts slated for 2026.