Amid rising US budget deficits and concerns about the erosion of the Federal Reserve's independence, global investors have dumped the US dollar for other currencies and assets such as gold, a precious metal that has seen its price increase more than 47% this year, hitting a record high, due to safe-haven demand.
The greenback has lost about 10% of its value this year, a trend that is expected to continue as the Fed is expected to ease policy further to stem labor market weakness. Meanwhile, the European Central Bank (ECB) may have stopped cutting interest rates.
US non-farm payrolls rose by just 22,000 in August 2025. While a separate Reuters poll showed the world's largest economy likely created 50,000 jobs in September 2025, the US government shutdown on October 1 will delay the release of the jobs report that markets are waiting for.
Nearly 75% of analysts, or 30 of 41 who responded to a question in a Reuters poll from September 26 to October 1, expect net dollar short positions to increase or the current trading pattern to remain largely unchanged by the end of October 2025. The latest data from the Commodity Futures Trading Commission shows that the net dollar short position that began in April of this year has remained.
The US dollar could remain weak for the next six to 12 months as the Fed continues to cut interest rates, while other major central banks such as the ECB are nearing or already at the end of their rate-cutting cycles, said Lee Hardman, senior currency analyst at MUFG.
On September 17, the Fed cut interest rates by 25 basis points to 4-4.25% and said it would cut rates again at its meetings in October and December. According to the CME FedWatch Tool, there is a 95% chance of a rate cut by October 2025.
The poll of nearly 80 foreign exchange strategists found the dollar will weaken against all major currencies over the next three, six and 12 months. More than 70% of analysts, 33 of 45 who answered an additional question, said the dollar is more likely to end 2025 lower than expected than stronger. Twelve said the dollar will be stronger.
The euro, which has gained more than 13% against the dollar this year, is expected to rise 1.5-3%, trading around $1.19, $1.20 and $1.21 over the next three, six and 12 months, respectively. The yen, meanwhile, is expected to gain about 6% in a year, to 139 yen per dollar.
Source: https://baotintuc.vn/thi-truong-tien-te/dong-usd-doi-mat-voi-su-sut-giam-keo-dai-khi-fed-cat-giam-lai-suat-20251002132401780.htm
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