## Will the US dollar still be buyable in 2025? Analyzing the exchange rate trend from historical cycles

The US dollar's movement has always been a focal point for global investors. To determine whether to buy the dollar in 2025, we first need to clarify the logic behind the forecast of the US Dollar Index trend.

### Why is the dollar depreciating? Understanding the 50-year pattern

Since the collapse of the gold standard in 1971, the US Dollar Index has experienced eight distinct cyclical fluctuations, each corresponding to different economic backgrounds.

In the 1970s, the dollar was abundant and declined to below 90; in the 1980s, Federal Reserve Chairman Volcker aggressively raised interest rates to 20%, pushing the dollar index to a high peak; during the internet boom of the 1990s, the dollar broke through 120 again; after the 2008 financial crisis, the dollar fell to 60; following the Fed's aggressive rate hikes in 2022, the dollar index, although rebounding to high levels, has never fully shed inflationary risks behind it.

Now? Looking at the situation from late 2024 to the present, the dollar index is at a low point since November (about 103.45), declining for five consecutive days and even breaking below the 200-day moving average. What does this technical signal usually imply? **A bearish signal has already appeared.**

### Why is the dollar weakening now?

In recent months, US economic data has started to "drop the ball." The employment data released in March fell short of expectations, directly increasing market expectations of multiple rate cuts by the Fed. Once rate cuts become highly probable, US Treasury yields will decline, and the attractiveness of the dollar to investors will naturally diminish.

This is the most critical part of the US Dollar Index trend forecast: **The Federal Reserve's monetary policy direction determines the fate of the dollar.** If the Fed truly begins a rate-cutting cycle, the dollar's depreciation trend will be very hard to reverse.

From a technical perspective, the current support level for the dollar is below 102. If economic data continues to weaken and the Fed remains committed to rate cuts, the dollar index is likely to further decline in 2025. However, in the short term, oversold conditions may lead to a rebound, but after the rebound, downward pressure will still remain.

### How will major currency pairs move? This is key for trading

**EUR/USD (Euro/US Dollar)**

The EUR/USD trend is almost completely opposite to the US Dollar Index. Currently, EUR/USD has risen to 1.0835. If the dollar continues to weaken, the euro is expected to keep rising, possibly breaking through the psychological level of 1.0900. This currency pair is particularly sensitive to divergence in monetary policies between the US and Europe—rate cuts by the Fed and easing policies by the European Central Bank (ECB) are bullish for the euro.

**GBP/USD (British Pound/US Dollar)**

The logic for the pound is similar to the euro, but the Bank of England's rate cut pace is expected to be slower than the Fed's. This provides relative support for the pound. In 2025, GBP/USD is likely to fluctuate within the range of 1.25-1.35, with potential for an upward trend. If economic policies between the UK and US diverge further, it could even surge above 1.40.

**USD/CNH (US Dollar/Chinese Yuan)**

This currency pair is the most complex, involving policy battles between two major economies. If the Fed continues to hike rates while China's economy slows, the RMB will face depreciation pressure, causing USD/CNH to rise. However, the central bank's guidance plays a crucial role here; market supply and demand are not the only factors. Currently, USD/CNH is oscillating between 7.23 and 7.26, lacking momentum for a breakout in the short term. Attention should be paid to whether it breaks below 7.2260 or above 7.26.

**USD/JPY (US Dollar/Japanese Yen)**

This is the most liquid currency pair globally. Japan has recently shown strong signs of economic recovery: January's average wages increased by 3.1% year-on-year, reaching a 32-year high. This suggests that the Bank of Japan may face upward pressure on interest rates. If Japan begins to raise rates while the Fed cuts, USD/JPY will decline. The forecast for 2025 is that this pair will likely trend downward; if it breaks below 146.90, further testing of lower levels is possible.

**AUD/USD (Australian Dollar/US Dollar)**

Australia's economic performance has exceeded expectations, with Q4 GDP and trade data surpassing market forecasts. The Reserve Bank of Australia (RBA) remains cautious, indicating no rush to cut rates in the short term, which provides support for the Australian dollar. Against the backdrop of a weakening dollar, AUD/USD is expected to benefit.

( Should I buy dollars now? Short, medium, and long-term perspectives

**Short-term (first half of 2025):** Structural oscillations, many opportunities for high sell and low buy

The dollar won't decline indefinitely; sudden deterioration in geopolitical conflicts or US economic data exceeding expectations could trigger a rapid rebound. Aggressive traders can use technical indicators within the 95-100 range of the dollar index to catch reversal opportunities, while conservative investors should wait to see if the Fed actually cuts rates.

**Medium to long-term (from the second half of 2025):** Mild depreciation of the dollar is a foregone conclusion

If the Fed indeed initiates a rate-cutting cycle, the advantage of US bond yields will diminish, and capital will flow into emerging markets or Europe with higher growth potential. The global de-dollarization trend (BRICS countries promoting local currency settlement, the rise of other reserve currencies) is also marginally weakening the dollar's attractiveness. A smart approach is gradually reducing long dollar positions and shifting into non-US currencies like the yen and Australian dollar, or allocating assets such as gold and copper.

Overall, successful trading of the dollar in 2025 depends on "flexibility + data-driven decisions." Every policy signal from the Fed and every non-farm payroll release can alter the expectations of the Dollar Index trend forecast. To profit from exchange rate fluctuations, you must closely monitor these data points and adapt accordingly.