US dollar forecast: Third-party data round-up

US monetary policy and global headwinds continue to sway major forex pairs – leaving many asking: what’s next for the US dollar forecast? Dive into our roundup of third-party insights and expert price predictions for 2025 and beyond.

By Dan Mitchell16:16 (UTC), 18 August 2025 Updated

US dollar forecast: Third-party data round-up — Can the US dollar keep on rising? – Photo: Andrii Spy_k / Shutterstock.com

Introduction

The US dollar (USD) is the official currency of the United States – and the world’s reserve currency. It sits at the heart of global trade, investment, and central bank reserves, and features in half of all major major forex currency pairs.

Its value is benchmarked against other leading currencies. For example, EUR/USD shows the value of the euro against the dollar. The US Dollar Index (DXY) – which tracks USD against a basket including the euro (EUR), yen (JPY), and pound (GBP) – stood at 98.71 in August 2025, down around 1.1% from its September 2024 level of 99.80.

The dollar moves on US economic policy, interest rate decisions, and major global events. Fed announcements, inflation trends, jobs data, and geopolitics all drive volatility.

In 2023, the Fed raised rates four times – each by 25bps – between February and July, reaching 5.25-5.50% by 27 July. It held steady until September 2024, when rates were cut by 50bps, followed by a further 25bps cut in December. As of August 2025, the rate remains at 4.25-4.50%.

Past performance is not a reliable indicator of future results

Current US dollar value and market position

As of 4 August 2025, the US dollar value has lost ground against most major currencies, driven by softer economic data and shifting rate expectations. EUR/USD trades around 1.1600, up 12.6% year to date, while GBP/USD is at 1.3300, a 7.3% rise. The dollar has slipped 6.6% against the yen (USD/JPY at 147.1) and dropped just over 4% versus the Canadian dollar (USD/CAD at 1.3800).

The July jobs report showed payrolls rising by only 73,000, with previous months revised lower. Trading Economics reported that ‘the US dollar index slipped below 99... as a soft July jobs report fuelled expectations for Federal Reserve rate cuts.’

Policymakers remain split. Gregory Daco of EY‑Parthenon noted that while seven Fed members still expect no cuts this year, the 10 anticipating one or two cuts in 2025 may hold off until clearer signs of labour market weakness. He forecasted cuts in September and December.

ING Think international economist James Knightley flagged the loss of momentum: ‘Manufacturing fell 11k, government 10k, business services 14k – only healthcare and private education rose (+79k). The revisions tell the bigger story: the jobs market is cooling faster than expected, and pressure on the Fed is building.’

Inflation was another concern, with Morgan Stanley expecting a Q3 peak between 3%-3.5% as tariffs feed through. ‘Tariffs lift inflation before dragging growth,’ said chief US economist Michael Gapen. ‘The Fed will likely prioritise inflation control until late 2025, when pressures begin to ease.’

Learn more about US interest rates in our guide.

Short-term US dollar forecast

As of 4 August 2025, short-term USD forecasts remain mixed, with analysts projecting modest shifts across key forex pairs through the second half of the year.

Trading Economics sees the DXY rising to 99.93 by Q3-end and 102.35 by August 2026, citing its heavy euro weighting. ‘The dollar is expected to remain sensitive to Fed policy signals and inflation data,’ the firm noted.

ING Think predicts a gradual decline, driven by expectations of US rate cuts and slowing growth. Its year-end targets include EUR/USD at 1.1800, GBP/USD at 1.3700, and USD/JPY easing to 140.00.

Meanwhile, a USD prediction from Scotiabank forecasts continued dollar strength against the euro and pound through 2025, but with a softer tone into 2026. Forecasts include EUR/USD averaging 1.1600 and GBP/USD at 1.4000, with analysts citing ‘Fed policy and global growth uncertainty’ as key drivers.

In contrast, JP Morgan Global Research takes a more bearish stance, warning of near-term downside. In its July outlook, it projected EUR/USD at 1.2200 by March 2026 and GBP/USD easing to 1.3900, driven by ongoing cyclical and structural pressures.

US dollar forecast for the next 5 years (2025-2030)

Looking ahead, Coin Codex offers a long-term USD forecast across major pairs, highlighting potential trends through 2030.

GBP/USD is forecast to average 1.2900 in 2025 and climb to 1.3300 in 2026. However, the trend reverses from 2027, falling to 1.1800, and then sliding further to an average of 1.1100 by 2030 – within a projected range of 1.0400 to 1.1700.

EUR/USD is expected to strengthen steadily, averaging 1.1700 in 2025, 1.3100 in 2026, and rising to 1.3700 by 2030. The 2030 range of 1.3300-1.4200 suggests sustained USD softness against the euro, particularly if US growth stalls or the Fed adopts a more dovish stance.

USD/JPY is seen averaging 149.55 in 2025 (with a high of 154.43 and low of 146.17), then easing to 144.82 in 2026 and down to 127.95 in 2027. After a brief uptick in 2028, the pair is forecast to settle near 128.27 by 2030.

USD/CAD is projected to average 1.3900 in 2025, fall to 1.3500 in 2026, and trade within a 1.3200-1.3800 range by 2030.

Remember, analyst forecasts are often wrong. They can’t account for unforeseen market events, and past performance isn’t a reliable indicator of future results.

FAQ

Is the US dollar expected to rise?

As of 4 August 2025, analysts were split on the US dollar outlook. Some, like ING Think, expected USD to weaken against the euro and pound through late 2025 as US growth slows and the Fed prepares to cut rates. Others noted the dollar could hold steady if inflation stays higher for longer. As JP Morgan puts it, ‘The path for the dollar will hinge on how quickly the Fed pivots and whether global growth improves.’

Could USD go up or down?

The US dollar could move in either direction. Key factors include US inflation, interest‑rate changes and shifts in global risk appetite. If US data surprises to the upside, the dollar may strengthen. However, evidence of a cooling jobs market or further Fed cuts could push USD lower. Trading Economics notes, ‘The dollar remains sensitive to Fed policy and upcoming data.’ Both gains and declines are possible – market updates and USD predictions should be monitored regularly.

When is the best time to trade the US dollar?

There is no universal best time. Volatility often increases around key US data releases, such as non‑farm payrolls or CPI, and during overlapping London‑New York trading hours. Major policy announcements can also drive sharp moves in USD pairs. Using real‑time analysis and managing risk is recommended for all traders, whether new or experienced.