The Global FX Outlook – December 2025

December brings continued resilience for the U.S. dollar, even as global markets prepare for a pivotal month of central bank decisions. With the Federal Reserve widely expected to cut rates on December 10 — and the ECB, BoE, and BoJ all meeting shortly after — interest-rate divergence is once again the dominant force shaping FX markets. The dollar remains supported by elevated inflation and delayed economic data following the U.S. government shutdown, while major alternatives like the euro, yen, and yuan lack strong enough momentum to meaningfully challenge USD strength.

Across major markets, currencies continue to adjust to shifting inflation trends, fiscal policies, and trade uncertainty. The euro is holding in a tight range following strong gains earlier in the year, sterling shows early signs of stabilizing amid expectations of a December rate cut, and the yen could strengthen if the Bank of Japan follows through with a long-anticipated rate hike. Meanwhile, commodity currencies — particularly the Australian and New Zealand dollars — are finding support from stronger global growth projections and changing central-bank paths, even as China’s domestic economy remains soft.

The December 2025 Currency Outlook breaks down how inflation pressures, interest-rate expectations, and developing geopolitical risks — including the upcoming U.S.–Mexico–Canada (USMCA) review — are shaping currency markets as we enter the final month of the year.

What you will learn in this report:  

• Market analysis: Why the U.S. dollar remains firm despite rising expectations of a December rate cut — and how delayed economic data, elevated inflation, and relative interest-rate advantages continue to support USD resilience.
• Currency projections: Updated 1–3 month views across USD, EUR, GBP, CAD, JPY, CNY, AUD, NZD, and MXN — including key crosses such as EUR/USD, GBP/USD, USD/CAD, USD/JPY, AUD/USD, NZD/USD, and USD/MXN.
  Get an inside view of expected ranges and the forces driving each pair into year-end.
• Risks to watch: Major December central-bank meetings (Fed, ECB, BoE, BoJ), USMCA trade-negotiation headlines, ongoing U.K. stagnation pressures, Japan’s political transition and its impact on BoJ decision-making, China’s economic slowdown, and further interest-rate recalibrations in Australia and New Zealand.