The US dollar inched higher on Wednesday but was still heading for its biggest annual drop since 2017 as interest rate cuts, fiscal worries and erratic US trade policy under President Donald Trump drove currency markets in 2025.
Those themes are likely to remain in 2026, suggesting the dollars dire performance could extend and underpin the behaviour of some of its peers , including the euro and sterling, which have made significant gains this year.
Adding to the dollars woes, concerns about the Federal Reserves independence under the Trump administration remain in focus. Trump said he plans to announce his pick for the next Fed chair sometime in January, replacing Jerome Powell whose term ends in May and who has faced constant criticism from the president.
