Today’s session opened with the U.S. dollar showing relative stability in a trading environment dominated more by anticipation than by movement. Thin liquidity due to holidays has limited market activity, while attention turns to the minutes of the latest Federal Reserve meeting, expected to shed light on the extent of differences within the policy committee regarding interest rate plans for the coming year.
On the broader picture, 2025 has not been an easy year for the U.S. dollar. The Dollar Index has gradually declined over the past months and is now approaching its lowest levels in three months. Technically, the current zone around 98 points is sensitive: remaining below 99.50 keeps the trend under pressure, while any stronger attempt to rise will face a real test near 100–101 points.
European currencies have been the main beneficiaries of the dollar’s weakness this year. The euro is trading near $1.17, supported by a sustained buying wave since the beginning of the year, and is poised to close the year with its best performance since 2017. The British pound has also maintained a steady upward trajectory, holding above $1.34, which boosts the likelihood of continued demand for the currency in the next quarter.
The Japanese yen has remained range bound against the dollar, near 156 yen, but this stability reflects waiting for a new market trigger rather than strength. Technically, a break above 158 yen could revive discussions of official intervention to support the yen, especially as inflation in Japan keeps the central bank considering additional rate hikes, though expectations suggest cautious implementation.
Trading data indicate a clear shift in the yen this year. Strong long positions seen in April have gradually faded, leaving speculators with only small short positions. This change shows that the market is no longer trading solely on interest rate decisions but also on economic growth expectations, meaning the yen needs a genuine improvement in GDP figures to regain lost momentum.
The Australian dollar has been among the most resilient currencies this year, with recent movements near $0.66–0.67 confirming continued flows into Australian assets. The currency is set to close the year with gains considered its best since 2020, supported by stable domestic growth expectations and strong investor demand for Australian bonds and equities compared to other alternatives.
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