The US dollar saw its worst performance in the first half of 2025 since 1991, losing nearly 11% of its value. Investors are selling dollars and turning to gold and other major currencies, with China’s central bank boosting the yuan. Confidence in the dollar continues to decline amid US fiscal concerns.

Experts predict further declines for the US dollar against major currencies due to slowing economic growth and potential rate cuts by the Federal Reserve. Ongoing criticism of Fed Chairman Powell by Trump has eroded confidence, leading to expectations of more rate cuts. Unsustainable fiscal moves and policy uncertainty may drive the dollar lower.

The euro has been strong in 2025, outperforming other G10 currencies. Analysts believe the ECB needs to attract global funds away from the US to continue this success. The EUR-USD exchange rate could reach 1.20 by year-end, with potential for further gains in 2026. Market pricing and USD weakness may support the euro’s rise.

The British pound has gained over 8% against the US dollar in 2025. Ongoing USD weakness is driving this trend, rather than GBP strength. Political uncertainty in the UK, including speculation over the Chancellor’s position, may impact fiscal policy and economic growth. Rising inflation limits the Bank of England’s room for rate cuts, but policy adjustments could ease pressures. Investors brace for continued decline in the US dollar as confidence wanes, leading to increased selling and buying of gold and major currencies. USD-JPY remains stagnant due to domestic growth challenges and stalled trade negotiations with the US. Swiss franc strengthens against the dollar with zero borrowing costs and potential SNB interventions. China’s yuan strengthens against the dollar, with projections to reach 7.15 by 2025 and 7.10 by mid-2026. Global reserve currency status of the dollar faces challenges, but a shift away will likely take years to unfold. Investors anticipate further decline in the value of the US dollar following recent steep drops, leading to increased interest in buying gold and other major currencies. Despite the growing confidence in alternative currencies, the US dollar is expected to maintain its dominance for the foreseeable future, even as China strengthens the yuan.

Read more at Morningstar.: How Low Can the US Dollar Go?