US Dollar Forecast & FX Outlook - December 2025
Stay ahead of currency markets with MTFX’s US Dollar latest Monthly Forecast for 2025. This page delivers expert analysis on USD performance, including exchange rate trends, economic drivers, and directional outlooks for major currency pairs like USD/CAD, EUR/USD, and GBP/USD. Access dynamic tables, FX projections, and economic event calendars to guide your international transfers and global payment planning. Whether you're a business or individual, use MTFX tools to make smarter foreign exchange decisions.
December 2025 US Dollar Performance & Market Context
The US dollar enters December on a softer footing as markets position for a potential year-end rate cut. Bond yields have eased, reducing the USD’s carry advantage and giving room for major and commodity-linked currencies to recover. Economic signals remain mixed: inflation continues to drift lower, the labour market is cooling, and risk sentiment is stable.
With global growth expectations modestly improving and commodity prices holding firm, broader USD pressure is expected to persist into early 2026. Volatility remains elevated into the final inflation and employment releases of the year.
December 2025 Global FX Performance
At the same time, the USD has managed to hold its ground, or even firm slightly, against a select group of currencies where local economic challenges, diverging policy signals, or DXY fluctuations remain in focus. Still, the overall narrative for the month points to a dollar that is gradually easing lower as international counterparts gain support from stronger domestic data, more stable inflation trajectories, or rising rate expectations. The trend suggests a continued recalibration in FX markets as investors reassess the relative strength of the US economy heading into year-end.
| Currency Pair | Dec 07, 2025 | Weekly Change | Monthly Change | Yearly Change |
|---|---|---|---|---|
| USD / CAD | 1.38 | -1.24% | -1.59% | -2.44% |
| EUR / USD | 1.16 | 0.32% | 0.71% | 10.39% |
| GBP / USD | 1.33 | 0.79% | 1.19% | 4.46% |
| USD / JPY | 155.25 | 0.03% | 1.34% | 2.84% |
| USD / CHF | 0.80 | -0.05% | -0.12% | -8.47% |
| USD / CNY | 7.07 | -0.03% | -0.75% | -2.63% |
| USD / INR | 89.95 | 0.71% | 1.79% | 6.39% |
| AUD / USD | 0.66 | 1.41% | 2.19% | 3.09% |
| NZD / USD | 0.58 | 0.98% | 2.81% | -1.33% |
| USD / MXN | 18.21 | -0.61% | -1.43% | -10.04% |
December 2025–2026 FX Forecasts
At the same time, the dollar’s projected path shows that its losses are expected to be orderly, influenced by improving global growth prospects and stabilizing inflation trends abroad. Currencies linked to recovering economies or more hawkish central bank outlooks are positioned to gain modest ground, while emerging-market pairs stand to benefit from improving risk appetite. Overall, the coming month’s forecast suggests a USD that remains functional and resilient, but gradually steps back from recent highs as market attention shifts toward relative growth momentum and cross-border rate differentials.
| Currency Pair | Dec 2025 | Mar 2026 | Jun 2026 | Sep 2026 |
|---|---|---|---|---|
| USD / CAD | 1.38 | 1.37 | 1.36 | 1.36 |
| EUR / USD | 1.17 | 1.20 | 1.22 | 1.25 |
| GBP / USD | 1.33 | 1.37 | 1.38 | 1.39 |
| USD / JPY | 153.50 | 150.00 | 148.00 | 145.00 |
| USD / CHF | 0.81 | 0.78 | 0.76 | 0.74 |
| USD / CNY | 7.10 | 7.05 | 7.00 | 6.98 |
| USD / INR | 88.50 | 87.50 | 87.00 | 86.00 |
| AUD / USD | 0.67 | 0.67 | 0.68 | 0.69 |
| NZD / USD | 0.58 | 0.60 | 0.62 | 0.63 |
| USD / MXN | 18.20 | 18.00 | 17.80 | 17.60 |
December 2025 FX Highlights & Monthly Ranges
Emerging-market dynamics reinforce the same trend. The USD shows a mild bearish bias against CNY and INR, supported by local policy stability and resilient growth profiles, while the MXN continues to attract strong carry flows that outperform in a soft-USD environment. Overall, the cross-currency picture suggests the USD is transitioning into a period of orderly depreciation rather than a sharp decline. The momentum shift is driven by easing US yields, fading rate-differential support, and improving sentiment toward non-USD assets, positioning the dollar on the defensive across most of the FX landscape heading into year-end.
| Currency | Market News | |
|---|---|---|
CAD | Canadian Dollar (USD/CAD) Oil holding in the low US $60s remains supportive but not aggressively bullish for Canada. The narrowing policy gap as markets anticipate Fed and BoC cuts in a similar 2026 window reduces the USD’s carry advantage. Positioning is balanced, allowing CAD to firm on dips, especially if US fiscal concerns continue to weigh on the dollar. CAD maintains a steady relative-value advantage in a softening USD environment. Bias:↑ CAD mildly bullish Dec 2025 USD/CAD Monthly Range: 1.37-1.42 | |
EUR | Euro (EUR/USD) The euro benefits from a fading USD premium as US yields drift lower into expected Fed easing. European growth remains subdued but stable, and no urgency from the ECB to match US rate cuts provides EUR with a relative rate advantage. With valuation still below long-term averages, EUR has room to grind higher as USD momentum softens. Bias:↑ EUR Bullish Dec 2025 EUR/USD Monthly Range: 1.16 – 1.20 | |
GBP | British Pound (GBP/USD) GBP is supported by stable UK rate expectations and reduced USD yield dominance. Economic activity in the UK is soft but improving at the margin, keeping sentiment steady. As long as US yields continue to compress, GBP retains an upward lean, although political and growth uncertainties may cap rallies. Bias:↑ GBP Mildly Bullish Dec 2025 GBP/USD Monthly Range: 1.31 – 1.35 | |
JPY | Japanese Yen (USD/JPY) USD/JPY stays elevated but shows signs of topping as US–Japan yield spreads narrow. Any shift in global risk sentiment or firmer domestic inflation pressure in Japan adds downside tilt. If the Fed signals multiple cuts into 2026, the pair risks breaking lower through key levels toward 150. Bias:↓ USD Bearish Dec 2025 USD/JPY Monthly Range: 151.00 – 155.00 | |
CHF | Swiss Franc (USD/CHF) CHF maintains strength as global volatility stays elevated and the softening USD narrative gains momentum. Lower US yields reduce USD’s relative appeal, while Switzerland’s stable macro backdrop supports safe-haven demand. Any risk-off episodes would add further CHF strength. Bias:↓ USD Bearish Dec 2025 USD/CHF Monthly Range: 0.79 – 0.82 | |
CNY | Chinese Yuan (USD/CNY) USD/CNY remains stable but biased slightly lower as USD loses rate support. Domestic conditions in China remain mixed, but policy stability and modest improvement in credit conditions help anchor the yuan. With global USD softness, CNY may gradually strengthen within a controlled band. Bias:↓ USD Mildly Bearish Dec 2025 USD/CNY Monthly Range: 7.05 – 7.15 | |
INR | Indian Rupee (USD/INR) The rupee stabilizes as oil prices remain contained and USD direction softens. India’s growth profile remains strong relative to peers, offsetting moderate external headwinds. INR may firm modestly if foreign inflows remain steady and USD yield support continues to fade. Bias:↓ USD Mildly Bearish Dec 2025 USD/INR Monthly Range: 87.50 – 89.50 | |
AUD | Australian Dollar (AUD/USD) AUD benefits from firm commodity prices and improving global risk appetite. The narrowing Fed–RBA rate gap reduces USD advantage, and AUD’s valuation remains attractive. Any stabilization in China’s demand profile or metals outlook supports further AUD gains. Bias:↑ AUD Mildly Bullish Dec 2025 AUD/USD Monthly Range: 0.66 – 0.69 | |
NZD | New Zealand Dollar (NZD/USD) NZD edges higher on improved global risk sentiment and stabilizing domestic inflation. While growth headwinds remain, a softer USD and firmer commodity backdrop support NZD. Upside may develop gradually as policy divergence with the Fed diminishes. Bias:↑ NZD Mildly Bullish Dec 2025 NZD/USD Monthly Range: 0.57 – 0.60 | |
MXN | Mexican Peso (USD/MXN) MXN remains resilient, supported by still-high domestic yields and stable macro conditions. A softer USD environment favours further peso strength, though volatility remains high. Risk-on tone and strong carry appeal keep MXN in demand unless global conditions deteriorate. Bias:↓ USD Mildly Bearish Dec 2025 USD/MXN Monthly Range: 17.80 – 18.40 | |
What Economic Data to Watch This Month
The most pivotal moment arrives with the Federal Reserve’s December interest-rate decision and press conference. Markets will be looking for clarity on the timing and scale of expected 2026 rate cuts, making this meeting a major potential catalyst for USD and DXY volatility. Later in the month, inflation data, CPI, core PCE, and the GDP update will either validate or challenge the Fed’s messaging. If inflation continues to moderate and growth shows signs of softening, the USD may come under further pressure; however, any upside surprises could offer temporary support. Overall, December’s data-rich calendar positions the United States dollar for heightened sensitivity to shifts in economic tone and central bank guidance.
| Currency | Date | Event |
|---|---|---|
| USD | Dec 8, 2025 | ADP Employment Change Weekly |
| USD | Dec 8, 2025 | JOLTS Job Openings |
| USD | Dec 9, 2025 | Fed Interest Rate Decision |
| USD | Dec 9, 2025 | FOMC Press Conference |
| USD | Dec 14, 2025 | NY Empire State Manufacturing Index |
| USD | Dec 15, 2025 | Nonfarm Payrolls |
| USD | Dec 15, 2025 | Retail Sales |
| USD | Dec 15, 2025 | Unemployment Rate |
| USD | Dec 17, 2025 | Inflation Rate |
| USD | Dec 18, 2025 | Core PCE Price Index |
| USD | Dec 18, 2025 | Existing Home Sales |
| USD | Dec 22, 2025 | GDP |
| USD | Dec 22, 2025 | CB Consumer Confidence |
| USD | Dec 23, 2025 | Durable Goods Orders |
| USD | Dec 24, 2025 | Christmas Holiday |
Written by
Ash Abbasi
Director of SalesAsh Abbasi is the Director of Sales at MTFX, specializing in corporate FX and cross-border payment solutions for Canadian businesses. With a background in sales leadership and account management across global markets, he helps clients optimize international transactions and manage currency risk. Ash holds a degree from Aston Business School and a postgraduate diploma from Humber College.
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What drives monthly changes in the US dollar exchange rate?
The USD dollar exchange rates shift monthly based on economic data, monetary policy, and global events. While some changes are minor, others can significantly impact international payments and investments.
Key factors behind monthly USD moves:
What drives monthly changes in the US dollar exchange rate?
The USD dollar exchange rates shift monthly based on economic data, monetary policy, and global events. While some changes are minor, others can significantly impact international payments and investments.
Key factors behind monthly USD moves:
Federal Reserve policy
Rate hikes or dovish signals can strengthen or weaken the dollar.
Inflation reports
Data like CPI and PPI shape expectations for interest rate changes.
Employment figures
Nonfarm payrolls and jobless rates reflect overall economic health.
GDP growth
Strong or weak economic performance affects USD sentiment.
How much can the US dollar move in a month?
The US foreign exchange rates can fluctuate by 1% to 3% against major currencies in a typical month. However, during periods of high volatility—such as interest rate hikes or geopolitical shocks—monthly movements may exceed 5%, especially against currencies like the Japanese yen or emerging market pairs.
These shifts directly impact the cost of international transactions, from sending money abroad to paying overseas suppliers. Staying informed on the USD forecast and understanding what drives these changes helps individuals and businesses make smarter financial decisions and manage currency risk more effectively.
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