US Dollar Faces Worst Annual Performance in Decades

Continuing Decline Amid Rate Cut Expectations

The US dollar remained under pressure on Wednesday (24/12/2025) as it continued on track for its worst annual performance in over two decades ¹

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Source 2

https://internasional.kontan.co.id/news/dolar-as-tertekan-menuju-penurunan-tahunan-terbesar-sejak-2017

. The decline is primarily driven by growing investor confidence that the Federal Reserve will implement further interest rate cuts in 2026.

Economic Data Fails to Reverse Trend

Despite the release of solid US economic growth data on Tuesday, market expectations regarding future interest rate policies remained unchanged ²

. Investors are now pricing in approximately two rate cuts by The Fed in 2026, with Goldman Sachs' Chief U.S. Economist David Mericle suggesting that the FOMC is likely to compromise on two 25 basis point cuts to the range of 3.00%-3.25% ²

Source 2

https://internasional.kontan.co.id/news/dolar-as-tertekan-menuju-penurunan-tahunan-terbesar-sejak-2017

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Currency Market Impact

The euro and pound sterling both saw significant gains, with the euro rising to its highest level in three months at around US$1.180, while the pound was trading at US$1.3522 ²

. This currency movement reflects the relative weakening of the US dollar against major currencies.

Market Outlook

The ongoing decline of the US dollar is creating significant implications for global currency markets. As major central banks are expected to have ended their monetary easing cycles, the potential for further Fed rate cuts is maintaining downward pressure on the dollar ²

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