The US dollar held steady 98.2 on the final trading day of 2025, remaining close to its lowest level since early October and on track for its largest annual decline since 2017. Over the year, the greenback has fallen 9.4%, reflecting a turbulent period that began with President Donald Trump’s chaotic rollout of tariffs. Expectations of Federal Reserve rate cuts, narrowing interest rate differentials with other major currencies, and concerns over fiscal deficits and the Fed’s independence have also contributed to the dollar’s weakness. Investors are now closely watching the appointment of a new Fed Chair, with Trump expected to announce Jerome Powell’s successor early next year. Meanwhile, minutes from the Fed’s December meeting revealed that most officials view additional interest rate cuts as appropriate if inflation declines further, though they remain divided over the timing and magnitude of such cuts. Markets continue to price in two quarter-point rate reductions in 2026.
