Will the US dollar still be buyable in 2025? Multi-currency benchmarking analysis + trading opportunity overview

First, look at history: How has the US dollar moved over the past 50 years

Since the collapse of the Bretton Woods system in 1971, the US Dollar Index has experienced 8 complete cycles. In simple terms: it rises sharply, then falls sharply, repeating over and over.

Key milestones:

• 1980s, Volcker’s high-interest rate era, the dollar was pushed to a peak (over 120 points at one point)
• After the internet bubble and the 2008 financial crisis, the dollar hit a historic low (around 60 points)
• 2022, the Federal Reserve aggressively raised interest rates, causing a brief rebound
• Now (end of 2024), the dollar index hovers around 103.45, down for 5 consecutive days

Core pattern: US rate hikes → dollar rises; rate cuts or liquidity easing → dollar weakens. This year is special because globally everyone is studying rate cuts, and the dollar is under pressure.

What is the current position of the dollar?

Key signals to predict the current dollar exchange rate trend:

Technical perspective: The US Dollar Index has broken below the 200-day moving average (bearish signal), and hit a new low since November. This indicates that bears are currently in control.

Fundamental perspective: US employment data in March fell short of expectations (traditionally seen as the dollar’s lifeline), and the market is betting that the Fed will cut rates more frequently. Rate cuts = decreased dollar attractiveness.

Policy perspective: Every move by the Federal Reserve determines the dollar’s fate. If a rate-cut cycle truly begins, the dollar may continue to weaken into 2025, possibly falling below 102.0. But if US economic data suddenly improves, the dollar could rebound.

Conclusion: In the short term, there may be a rebound opportunity; in the long term, a low probability of sustained weakness.

How will the dollar move against major currencies? Break it down one by one

EUR/USD (Euro/US Dollar)

EUR/USD generally moves inversely to the dollar index. It has now risen to 1.0835, with an upward trend continuing.

Logic chain: Dollar weakens → Euro becomes relatively stronger → EUR/USD goes up. If Europe’s economy truly starts to improve, and US economy slows down, this trend will strengthen.

Technical key point: The 1.0900 level is a critical resistance. Once broken, it may continue upward. Support below is at previous highs.

GBP/USD (British Pound/US Dollar)

GBP/USD is similar, also moving inversely to the dollar. But the Bank of England is expected to cut rates more slowly than the Fed (relatively more hawkish), which supports the pound.

2025 outlook: Likely to oscillate upward within a core range of 1.25-1.35. In an extreme scenario where UK and US policies diverge significantly, GBP/USD could surge above 1.40. But risks include political instability in the UK and market liquidity shocks, which could cause pullbacks.

USD/CNH (US Dollar/Chinese Yuan)

This pair mainly depends on policy differences and economic strength between the two countries.

Current situation: USD trades between 7.23-7.26, lacking momentum for a breakout in the short term.

Possible change: If the Fed really starts cutting rates and China’s economy stabilizes or rebounds, the RMB will strengthen, and USD/CNH will go down. Conversely, the opposite is also true.

Trading opportunity: If USD breaks below 7.2260, technical indicators show oversold conditions, possibly signaling a rebound.

USD/JPY (US Dollar/Japanese Yen)

This pair is quite special. Japan’s recent data is good (wages up 3.1% YoY, the highest in 32 years), which is rare for Japan. If the Bank of Japan feels inflation pressure, it might consider raising interest rates.

2025 forecast: USD/JPY is likely to decline. The yen will appreciate, and the dollar will weaken. Technically, if it breaks below 146.90, it may continue downward; a reversal would require breaking above 150.0.

AUD/USD (Australian Dollar/US Dollar)

Australia’s latest economic data is strong (Q4 GDP rose 0.6% QoQ, above expectations; trade surplus of 56.2 billion), and the Reserve Bank of Australia remains cautious (hinting at no rush to cut rates). These support the Australian dollar.

Key assumption: As long as the Fed does not initiate large-scale rate cuts, the AUD can stay relatively strong. AUD/USD has upward momentum.

Should you buy dollars now? How to operate?

Short-term strategy (Q1-Q2): Follow the swings

Reasons to buy dollars (bullish):

• Geopolitical conflicts suddenly escalate (e.g., increased tensions), causing safe-haven demand, pushing the dollar index quickly to 100-103
• US employment data unexpectedly beats expectations, market reassesses rate cut pace, dollar rebounds

Reasons to sell dollars (bearish):

• The Fed confirms a continuous rate-cut path, while the European Central Bank remains on hold, pushing the dollar index below 95
• US debt issues intensify, bond auctions underperform, and dollar creditworthiness is questioned

Aggressive traders: Trade within the 95-100 range, using MACD, Fibonacci, and other technical indicators to find reversal points, buying low and selling high for profit.

Conservative traders: Wait until the Fed’s policy direction is clearer before acting.

Mid-to-long-term strategy (after Q3): Gradually reduce dollar holdings

If the Fed truly enters a rate-cut cycle, US Treasury yields will gradually lose their advantage. Capital will flow into high-growth emerging markets or Europe.

Specific suggestions:

• Gradually reduce long dollar positions
• Slightly allocate to non-US currencies (yen, AUD, which are relatively strong)
• Consider assets linked to commodities (gold, copper), which tend to perform well in dollar weakness

Bottom line tips

The key word for the 2025 dollar exchange rate forecast is “flexibility.” Data-driven, event-sensitive, with no absolute direction. Every Fed meeting can change the game, and geopolitical surprises can alter expectations.

To profit from currency fluctuations, the core is to stay disciplined, set stop-losses, and avoid stubbornly holding long or short positions. Adjust promptly when new data comes out—that’s the proper way to trade.