Will the US dollar in 2025 "win effortlessly" or "crash"? Key signals and trading opportunities fully analyzed

USD Trend Analysis: Viewing the Current Situation Through Historical Cycles

Why is the US dollar so important? Simply put, it serves as a “barometer” of the health of the US economy. The USD exchange rate refers to the value of USD in terms of other currencies, for example, EUR/USD=1.04 means 1 euro needs 1.04 USD to exchange. When this number rises, it indicates the dollar has depreciated; when it falls, the dollar has appreciated.

The policies of the Federal Reserve and other major central banks directly control the USD trend. Over the past 50+ years, the dollar has experienced 8 complete cycles:

Starting from the 1971 collapse of the Bretton Woods system, the USD has gone through a cycle of “liquidity expansion → inflation → rate hikes → appreciation → depreciation.” The most dramatic was the 2008 financial crisis, when the dollar briefly fell to a historic low of 60; in 2022, the Fed aggressively raised interest rates, pushing the dollar to a 25-year high. However, this rate hike also planted hidden risks—high interest rates increased debt risks.

Currently, the USD is Swings on the Edge of “Sell” or “Buy”

Latest signals indicate a shift in the dollar. The USD index has fallen for 5 consecutive days, now hovering around 103.45—its lowest since November. More importantly, it has broken below the 200-day moving average, a clear technical “bearish” signal.

The straightforward reason for this decline: US employment data in March fell short of expectations, prompting market bets that the Fed will cut rates more frequently. Once a rate cut cycle begins, Treasury yields will decline, reducing the attractiveness of USD assets—after all, no one wants to hold low-yield USD assets.

But don’t rush to short the dollar, as a rebound risk exists. If US economic data suddenly improves or geopolitical conflicts escalate, the dollar could quickly rebound to the 100-103 range. This is also why the USD trend forecast for 2025 shows a “range-bound oscillation.”

Different Currencies Have Different “Attitudes” Toward the USD

EUR/USD: Likely to Continue Rising
The euro is currently trading around 1.0835, approaching the psychological 1.0900 level. If the Fed continues to cut rates while the European Central Bank lags in policy improvement, the euro will continue to strengthen. In the short-term USD analysis, the euro is the most likely currency to gain upward momentum.

GBP/USD: Volatile but Slightly Stronger
The Bank of England is more cautious than the Fed, with a slower pace of rate cuts. This gives the pound a relative advantage. The expected fluctuation range is 1.25-1.35, and if policies further diverge, it could surge above 1.40.

USD/CNH: Depends on Fed Policy
If the Fed continues to hike rates and China’s economy slows, the USD will appreciate, pushing this exchange rate higher. Currently trading in the 7.2300-7.2600 range, waiting for a breakout signal. A break below 7.2260 might present a rebound opportunity.

USD/JPY: Facing Downward Pressure
Japan’s recent wage growth hit a 32-year high (3.1%), hinting at rising inflation, which could prompt the Bank of Japan to raise rates. Once Japan hikes rates, the USD will likely depreciate relative to the yen. USD/JPY is expected to test below 146.90, possibly hitting new lows.

AUD/USD: Supported by Australian Economy
Australia’s economic data is strong (GDP exceeded expectations, trade surplus hit a high), and the RBA maintains a hawkish stance. If the Fed continues easing, the AUD will follow upward.

How to Trade the USD in 2025? Phased Strategy

Short-term (Q1-Q2): Many Swing Trading Opportunities

Three key scenarios to watch:

• Geopolitical escalation → USD rapidly surges to 100-103
• US data improves → Market delays rate cuts, USD rebounds
• ECB eases early → Euro strengthens, USD index drops below 95

Aggressive traders can trade the DXY (US dollar index) between 95-100, using MACD and Fibonacci retracements to catch reversals. Conservative traders should wait for the Fed’s policy to become clearer.

Mid to Long-term (Post-Q3): USD May Enter Mild Depreciation

Once the Fed’s rate cut cycle deepens and Treasury yield advantages diminish, capital will flow into emerging markets and European recovery plays. If the global de-dollarization accelerates, the USD’s reserve status will weaken marginally.

In this phase, it’s advisable to gradually reduce USD long positions and shift to relatively strong non-USD currencies like JPY, AUD, or allocate into commodities like gold and copper.

Final Trading Discipline

The key to analyzing USD trends in 2025 is “data-driven + event-sensitive.” Every Fed meeting, US employment report, and central bank statement can change the game. Only by staying flexible and setting proper risk controls and stop-losses can you capture real opportunities amid exchange rate fluctuations.

Don’t be scared by short-term rises and falls; USD cycles are normal. The key to trading this year is to identify good entry and exit points.