The US Dollar Index (DXY) remains marginally higher in a quiet year-end session on Wednesday. Still, the Index has given away most of the daily gains, after peaking at 98.44, and trades near 98.25 heading into the US session opening.

The DXY, which measures the value of the greenback against a basket of six currencies, is trading about 2% below November's peak, at 100.40, and on track to a nearly 10% yearly depreciation, its weakest performance in the last eight years.

The US Dollar has been one of the weakest G8 performers in 2025
Investors' concerns about the impact of US President Donald Trump's erratic trade policies and growing signs of economic slowdown have boosted US Dollar short positions throughout the year. Beyond that, the unprecedented political pressures on the Federal Reserve to cut borrowing costs have eroded the market's confidence in the bank's independence, calling into question the US Dollar's status as the world's reserve currency.

With this in mind, the Federal Reserve remains halfway through its monetary easing cycle, at a moment when most of the world's central banks have reached their terminal rate. This has been a strong headwind for any significant Greenback recovery, and is likely to keep the US Dollar under pressure in 2026.

Trading volumes remain low in the last trading day of the year, but the US weekly Jobless Claims report might provide a last impulse to the FX market. Applications for unemployment benefits are expected to have grown to 220K in the week of December 16, from 214K in the previous week. The risk for the USD is skewed to the downside.

Source: Fxstreet