The US dollar is heading for its worst annual performance in more than two decades as investors bet that the Federal Reserve will continue cutting interest rates while other major central banks react more cautiously, Reuters reported.
The greenback was under pressure in Asian trading on Wednesday, with a stronger-than-expected US GDP reading that failed to shift expectations for looser policy. Analysts say the markets are pricing in about two more Fed rate cuts in 2026.
The dollar’s decline follows a volatile year marred by policy uncertainty and political pressure. President Donald Trump’s extreme tariff measures earlier this year weighed on the markets’ view of US assets, while concerns about political influence over the Fed have also unsettled investors.
In contrast, the euro has benefited from diverging monetary policy expectations. The single currency rose to a three-month high of USD 1.18 and is up more than 14% this year, putting it on track for its strongest annual gain since 2003.
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