The US dollar index will fall by about 9% in 2025 and will record its worst annual performance in eight years. The main factors driving the weakening dollar include expectations of interest rate cuts from the Federal Reserve, narrowing interest spreads with other major currencies, and concerns about the US fiscal deficit and political uncertainty. According to data from the Bank for International Settlements, the real effective exchange rate index for the US dollar in October was 108.7. Although it is down from the record high of 115.1 set in January, it is still high, indicating that the US dollar is still highly valued. The market generally expects that the US dollar will continue to weaken in 2026. The core logic is that global growth may be consistent, America's economic growth advantage is expected to narrow, and factors such as German fiscal stimulus and economic improvements in the Eurozone may reduce the attractiveness of the US dollar. The fragmentation of monetary policy is another major source of pressure. The market expects that the Federal Reserve may take a more dovish stance and continue to cut interest rates after the new chairman takes office, while major central banks such as the European Central Bank may keep interest rates unchanged or even raise interest rates. Investors warned that despite the bearish long-term trend, the US dollar may rebound in the short term due to factors such as capital inflows into the stock market brought about by the AI boom. Any major blow to America's economic growth could be an additional drag on the US dollar.

The US dollar index will fall by about 9% in 2025 and will record its worst annual performance in eight years. The main factors driving the weakening dollar include expectations of interest rate cuts from the Federal Reserve, narrowing interest spreads with other major currencies, and concerns about the US fiscal deficit and political uncertainty. According to data from the Bank for International Settlements, the real effective exchange rate index for the US dollar in October was 108.7. Although it is down from the record high of 115.1 set in January, it is still high, indicating that the US dollar is still highly valued. The market generally expects that the US dollar will continue to weaken in 2026. The core logic is that global growth may be consistent, America's economic growth advantage is expected to narrow, and factors such as German fiscal stimulus and economic improvements in the Eurozone may reduce the attractiveness of the US dollar. The fragmentation of monetary policy is another major source of pressure. The market expects that the Federal Reserve may take a more dovish stance and continue to cut interest rates after the new chairman takes office, while major central banks such as the European Central Bank may keep interest rates unchanged or even raise interest rates. Investors warned that despite the bearish long-term trend, the US dollar may rebound in the short term due to factors such as capital inflows into the stock market brought about by the AI boom. Any major blow to America's economic growth could be an additional drag on the US dollar.