Dollar 2025: When the Global Financial Center Enters a New Phase

Why the US Dollar Matters Beyond Borders

In the world of international finance, the dollar is not just a common currency but the (Anchor) of the global payment system. Currently, it accounts for 88% of cross-border trade transactions.

When the dollar moves, the ripple effects spread across assets worldwide. For example, when the dollar strengthens, commodity prices traded in dollars tend to resist selling pressure because foreign buyers have to pay more in their own currencies.

This status makes monitoring the trend of the dollar a primary role for market analysts, whether fund managers or retail traders.

Variables That Truly Cause the Dollar to Change

Interest rate policies are at the core

The Federal Reserve’s (FED) decisions are not just about shifting gears but involve complex analysis of the economy. Recently, the FED has cut interest rates several times since the second half of 2024 but paused the cuts entering 2025 because some inflation figures have become more persistent than expected.

The US economy is dynamic

Employment figures (Payroll), Consumer Price Index (CPI), and Gross Domestic Product (GDP) are not just numbers on paper but indicators of economic strength. When the US economy is robust, foreign capital flows into dollar assets.

Geopolitical factors

During times of international tension, investors often flee to safe assets (Safe Haven), with the dollar being the first choice. However, using the dollar system as a tool for sanctions has prompted many countries to seek ways to reduce dependence.

Tracing the Economy: When the Puzzle Pieces of the Dollar Collide

Era of Quantitative Easing (2009-2011)

During QE1 and QE2 after the Subprime crisis, the DXY index, which measures dollar strength, was suppressed to the 73-83 range. The massive liquidity injected by the FED was like giving medicine to the patient, but the dollar itself depreciated.

Era of European Debt Battles (2012-2014)

The Greek crisis and European public debt issues caused investors to flock to the dollar as a safe haven. Although the FED continued to inject money via QE3, the DXY started rising from around 75 to 78-83 points.

The era when the dollar could speak (2014-2016)

A major turning point occurred when the FED ended QE3 and signaled interest rate hikes. The US economy’s strong recovery caused the DXY to surge from 80 to reach 100 points, breaking out of its previous range significantly.

The era of uncertainty (2017-2019)

America First policies and Trump’s trade wars caused the DXY to fluctuate between 90-100 points. A clear consolidation formed, unable to break above 100.

The COVID and Zero Lower Bound era (2020-2021)

The COVID-19 lockdown forced the FED to cut interest rates emergency and inject massive liquidity. Interestingly, even as the economy collapsed, the DXY only retreated to around 90 and formed a strong Triple Bottom, reflecting confidence in the dollar’s safe haven status.

The inflation and devaluation era (2022-2023)

High inflation forced the FED to rapidly raise interest rates from 0.25% to 5.25-5.50% within a year. As a result, the DXY skyrocketed in a parabola from 95 to a 20-year high of 114.

2024: The first door opens

When the FED announced the first interest rate cut in August 2024, the DXY shifted to a downtrend, falling from 108 to 99. For the market, this signals the end of the rate hike cycle.

2025: The ambiguous stance

Surprisingly, the FED appeared to “pause” rate cuts while maintaining the DXY at 4.25%-4.50%. The market became confused. The DXY fluctuated between 96.50-98.50. Technically, a base was formed at 97.00, a key support level. If it holds, it may test resistance at 98.50 or break lower to resume a downtrend.

Looking Ahead: Potential Trends for the Dollar

In the long term, structural factors such as the US budget deficit remain heavy. Meanwhile, de-dollarization driven by the use of the dollar as a tool for sanctions has led many central banks to accelerate allocations into gold and other currencies.

However, these processes will take decades, as no currency can match the dollar’s dominance.

Building Returns in the Dollar Debt Fortress

Gold: Plus Number

Gold is inversely correlated with a strong dollar. Investors can choose to buy physical gold (despite storage costs) or high-liquidity ETFs.

Forex: A bet for the experienced

Opening a short position (Short) on the dollar against currencies with strong fundamentals, such as the euro or yen, is one approach. However, forex trading is highly risky due to leverage.

Risk assets: Maturation benefits

With global liquidity still high, large tech stocks like Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla benefit from a weaker dollar because of high foreign income. Their stock prices surged significantly in the second half of 2024 but slowed in the first half of 2025 after the FED paused rate cuts.

Bitcoin and digital assets tend to follow a similar pattern, rising in late 2024 but stalling in 2025 (except for Bitcoin which remains hot).

Balance: The key to survival

The most important thing is diversification. Avoid investing all in a single strategy. Combine multiple strategies and closely monitor economic indicators to adjust your portfolio when changes occur.

Conclusion: Prepare for the Sea

Dollar trend in 2025 is full of uncertainty. The clear downtrend of 2024 was temporarily halted by the FED’s decision. Future decisions will depend on economic data.

Nevertheless, despite short-term uncertainties, long-term structural factors such as the US deficit and de-dollarization trends continue to signal pressure on the dollar. This suggests that the downtrend remains a broad consensus, but timing and pathways may be more volatile than previously expected.