Dollar down 8.1% in 2025; markets eye May decision on Powell successor

On December 31, 2025, the Bloomberg Dollar Spot Index showed an 8.1% year-to-date decline, the steepest annual drop in eight years. The outlook hinges on who replaces Jerome Powell when his term ends in May, with traders pricing at least two U.S. rate cuts in 2026 while Europe is seen on hold and some peers may raise rates.