The dollar is heading for an annual decline as the yen stabilizes and the euro and pound recover.

The dollar was steady on Wednesday but is on track for its biggest annual decline since 2017, as interest rate cuts, concerns about fiscal conditions and volatile trade policies under U.S. President Donald Trump cast a shadow over currency markets in 2025.
A number of those concerns are likely to persist into 2026, suggesting that the dollar's poor performance could extend and support other major currencies, such as the euro and the British pound, which have made significant gains this year.
Adding to the dollar's woes are continued concerns about the independence of the Federal Reserve (the US central bank) under the Trump administration, which has said it intends to announce its choice for Fed chairman in January, replacing Jerome Powell, whose term ends in May and who has faced repeated criticism from the president.