The first half of 2025 has delivered a broad-based setback for the USD, which has declined sharply against all major currencies. Year to date, the greenback is down 14.38% against the Swiss franc, 14.19% against the euro, 9.90% against the British pound, 8.84% against the Japanese yen, 8.01% against the New Zealand dollar, 6.23% against the Canadian dollar, and 5.35% against the Australian dollar. This decline reflects a shift in global interest rate expectations, resilience in foreign economies, and a recalibration of safe-haven demand.
The U.S. Dollar Index (DXY), which tracks the USD against a basket of six major currencies, has declined nearly 8% year to date, falling from above 104 in January to just below 96 at the end of June. On the monthly chart below, the index is coming up on a trendline that stretches back to 2010. Technically, the DXY has broken below its 200-day moving average and breached support at 98.00, suggesting further downside risk unless U.S. data surprises to the upside. The next significant support level lies near 94.80, while resistance stands at 98.50.
Below, we take a closer look at each of the G10 majors, providing a brief assessment of the economic backdrop and central bank outlook, followed by a technical view on where each currency might be headed in the second half of the year.
CHF – Swiss Franc
Economic & Policy Outlook:
Switzerland’s low-inflation economy continues to defy global trends. The Swiss National Bank (SNB) surprised markets with an early rate cut in March, but has since adopted a wait-and-see posture. Despite lower policy rates, the CHF has remained remarkably strong, aided by persistent current account surpluses and safe-haven inflows amid geopolitical uncertainty. The SNB has not intervened aggressively in FX markets, reinforcing the currency’s upward bias.
Technical View:
USD/CHF broke below key support at 0.8800 in April and has since extended lower toward the 0.8600 handle. Momentum indicators are deeply oversold on the weekly chart, but trendlines suggest further downside toward 0.8500 if U.S. yields continue to slip. Resistance comes in at 0.8800 and then 0.8950. A sustained recovery will require a clear shift in Fed rhetoric or a rise in global risk appetite.
EUR – Euro
Economic & Policy Outlook:
The eurozone economy has staged a gradual rebound, led by stronger-than-expected German industrial data and improving services PMI figures across the bloc. The ECB delivered its first rate cut in June but emphasized a cautious, data-dependent approach going forward. Sticky wage growth and firm core inflation suggest that the ECB won’t be in a rush to cut again, lending support to the EUR.
Technical View:
EUR/USD has carved out a steady uptrend since bottoming near 1.06 in February. The pair broke through 1.09 in May and now faces resistance at 1.10 and 1.1125. A break of the latter would open the door to 1.1270. RSI is elevated but not extreme, and moving averages remain in bullish alignment. Support is seen at 1.0850 and 1.0720.
GBP – British Pound
Economic & Policy Outlook:
The UK economy has avoided recession, with a resilient labor market and stubborn inflation keeping the Bank of England on edge. While markets anticipate the first BoE rate cut in Q3, policymakers have remained noncommittal. Political stability following the July elections could support sentiment, but weak productivity and Brexit-related trade frictions remain long-term drags.
Technical View:
GBP/USD broke above 1.2700 in June and is now approaching a critical resistance band around 1.2900–1.3000. Momentum remains strong, and a weekly close above 1.30 would be technically significant, potentially opening the path to 1.3250. Initial support lies at 1.2720 and deeper at 1.2550.
JPY – Japanese Yen
Economic & Policy Outlook:
The Bank of Japan remains a global outlier, slowly transitioning away from ultra-accommodative policy. While it ended negative rates earlier this year, it continues to lag its G10 peers in tightening. Still, rising wage growth and signs of inflation persistence could prompt a more hawkish BOJ later in the year, particularly if USD/JPY pressures mount.
Technical View:
USD/JPY staged a sharp reversal from its April highs above 160, falling below 152 amid intervention fears and softer U.S. yields. The pair now finds support at 150 and 148. Resistance sits near 154 and then 156. The BOJ’s verbal jawboning and actual intervention remain key risk factors, and implied volatility remains elevated.
NZD – New Zealand Dollar
Economic & Policy Outlook:
New Zealand’s economy is showing signs of stabilization after a technical recession, helped by strong migration and resilient commodity exports. The RBNZ has remained one of the more hawkish central banks, warning that rates may stay restrictive for longer to tame inflation. This divergence has supported NZD outperformance.
Technical View:
NZD/USD has broken above key resistance at 0.6100 and is now testing 0.6220. Momentum is strong, with MACD signaling further upside and next resistance at 0.6350. Support lies at 0.6050. The pair is also benefiting from a broader risk-on environment and relative yield attractiveness.
CAD – Canadian Dollar
Economic & Policy Outlook:
The Canadian economy is slowing, with tepid GDP growth and rising unemployment, prompting the Bank of Canada to cut rates in June. However, the BoC emphasized a gradual path and kept the door open to pausing if inflation flares back up. Oil prices have been supportive but not dominant in the CAD narrative this year.
Technical View:
USD/CAD broke below 1.3700 in May and continues to grind lower. Support comes in at 1.3575, with a break targeting 1.3420. Resistance sits near 1.3720 and 1.3840. The pair is tracking U.S. yields closely, and a dovish Fed could push USD/CAD toward 1.3300 by year-end.
AUD – Australian Dollar
Economic & Policy Outlook:
Australia’s economy has held up better than expected, and the RBA has kept a hawkish bias, warning of upside inflation risks. Housing prices remain firm, and the labor market shows few signs of weakness. With China’s stimulus finally showing some traction, the AUD may get an additional tailwind into the second half.
Technical View:
AUD/USD has broken out of its 0.6450–0.6650 range and now trades near 0.6750. A decisive move above 0.6800 opens the path to 0.6950. Key support remains at 0.6620 and 0.6480. The pair is increasingly tracking equity market risk sentiment and commodity flows, particularly iron ore.
Emerging Market Currencies
A likely secular decline in the U.S. dollar can be spotted when emerging market currencies break through major resistance levels. Dollar downturns tend to be prolonged and broad, often fueling rallies in metals, commodities, and foreign currencies, as seen in the 1970s and early 2000s.
Does this signal the USD losing its reserve currency status? Unlikely, given the unmatched depth of the U.S. bond market. However, it may further erode the dollar’s dominance, paving the way for a more multipolar currency system, with the euro and Chinese yuan gaining prominence.
Final Takeaway
The broad selloff in the U.S. dollar during the first half of the year underscores the power of monetary policy divergence and global macro resilience. While much will hinge on the Fed’s path forward, the momentum favors further USD weakness unless growth or inflation surprises bring the Fed back into play. As always, volatility and headline risk will remain elevated, and positioning into the second half requires both discipline and flexibility.