The US dollar fell to around 98.2 on the first trading day of 2026, building on its steepest annual loss in eight years. The greenback shed about 9% last year, weighed down by policy uncertainty following President Donald Trump’s tariff measures, rising expectations of Federal Reserve easing, a narrowing yield advantage over peers, and investor concerns over fiscal deficits and the Fed’s autonomy. Meanwhile, traders are now watching key US economic data, including next week’s payroll report, which could shed light on the labor market and the outlook for interest rates. Attention is also turning to Fed leadership, with President Donald Trump expected to name a successor to Jerome Powell early this year, as markets speculate for a more dovish appointment. Traders are currently pricing in two rate reductions this year, compared with the Fed’s own projection for just one.
