Following unusually strong price changes for currency markets in the first half of 2025, volatility decreased noticeably during the summer months. As a result of the resumption of the interest rate cut cycle in the US, the dollar temporarily came under extra pressure but recently stabilised again.

In this PERSPECTIVES Viewpoint FX: "Monetary policy back in the spotlight", we analyse the factors expected to influence exchange rates in the coming months. We also provide our 12-month outlook for the USD and some other currencies.

Key takeaways:

  • Following the Fed's resumption of its interest rate easing cycle, the USD fell to new annual lows. Although it has stabilised recently, the headwinds are likely to pick up again. The EUR should be supported by fiscal spending in Europe.
  • The BoJ is still proceeding very slowly with monetary normalisation, while Japanese domestic politics is marked by uncertainties. The JPY should appreciate in the medium term, though.
  • Despite China’s trade conflict with the US, the CNY recently rose to a 12-month high against the USD. Beijing remains interested in a strong CNY due to stable FDIs.

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The PERSPECTIVES Viewpoint is currently available and client-ready for the following regions: Germany, Americas, Europe, Middle East, Africa and Asia Pacific.

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