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>>USD Forecast 2025: Overcoming Significant Structural Headwinds with a Cautious Federal Reserve

USD Forecast 2025: Overcoming Significant Structural Headwinds with a Cautious Federal Reserve

crypthub

about 8 hours ago

Structural Headwinds

Twin fiscal and current‑account deficits force the dollar to seek foreign capital. Higher debt‑to‑GDP and faster overseas growth cut its edge. Reserve managers shift assets from the dollar to other currencies and gold.

Federal Reserve's Patient Stance

The Fed remains data‑dependent, using a ‘wait‑and‑see’ stance to keep inflation near 2 %. It avoids quick rate moves, keeping a higher‑for‑longer yield. This caution gives short‑term dollar support while protecting growth.

Market and Investment Implications

The tug‑of‑war yields range‑bound EUR/USD and USD/JPY, spiking on key data. A stronger dollar pressures emerging‑market debt; a weaker one eases costs. Investors must watch fiscal health, reserve shifts, and policy cues.

Outlook and Key Indicators

Analysts see short‑term dollar strength when policy diverges, yet structural drags limit momentum. Watch TIC flows, trade balance, CPI/PCE, and FOMC releases. Expect controlled volatility and range‑trading through 2025.