We’re in the early days of 2025 and already it’s shaping up to be an interesting year for forex traders, investors and brokers. Commodities are entering a supercycle, gold is estimated to hit just shy of $3,000 this year and oil prices could go either way depending on geopolitical tensions. Meanwhile the world’s most popular currency, the US dollar index (DXY) gained 6.5% in 2024 but has the headwinds of the BRIC nations aiming for de-dollarisation. We’re taking a dive into key forex trends to watch this year, and the forex marketing you need to cash in on them.
Central Banks and Interest Rates
The US Federal Reserve (Fed) and European Central Bank (ECB) policies play a central role in currency movements. If inflation persists, we may see banks raising or maintaining high rates in a bid to strengthen their internal currencies. In December 2024, the Fed lowered rates to 4.25%-4.50% and Fed Chair Powell commented on the strength of the US recovery even amongst high interest rates and elevated inflation. A strong job market may see the Fed holding off on any rate cuts until March 2025.
Across the Atlantic, inflation in Europe is lowering at a faster rate which means the ECB is likely to keep lowering interest rates. With the interest rate differential between the Fed and ECB, we may see increased demand in the US dollar against the euro and sterling pound. After a healthy 2024, the Bank of Japan (BOJ) is expected to raise rates 2-3 times in 2025, raising the benchmark to 1% – the first time in 30 years.
Global Forex Trends
With Trump set to enter the White House on 20 January, the persisting war between Russia and Ukraine, and the expanding ME conflict, forex trends will be difficult to predict. Here’s what forex traders and brokers should be keeping an eye on.
Chinese yuan
Ongoing trade tensions between China and the US is likely to impact global trade resulting in volatility for the CNY.
Australian dollar
The Aussie dollar (AUD) and other currencies tied to global trade flows are likely to be pulled into the turmoil with risk sentiment set high.
Great British pound
In a post-Brexit landscape, the GBP will rely on the evolving relationship between the EU and UK. Any changes to trade agreements or political stability in the UK could lead to volatility for the sterling.
Euro
The ECB is expecting growth to grow to 1.1% this year and 1.4% in 2026 as inflation continues to ease thanks to the drop in energy prices.
Russian ruble
The RUB, along with energy prices, are likely to feel lasting effects as the Russian-Ukraine conflict continues.
Emerging markets currencies
Prices of emerging markets currencies will depend on their domestic economic performance as well as the global macroeconomic environment. Currencies like the Turkish lira (TRY) and Argentinian peso (ARS) may face further pressure if political instability worsens.
Safe haven currencies
With uncertain geopolitics and economic outlooks, investors may rush to safe haven currencies like the USD, CHF (Swiss franc) and JPY (Japanese yen). If global economic growth continues, risk-off assets and currencies like the Australian dollar (AUD) and Canadian dollar (CAD) and emerging market currencies may get a boost.
Energy commodities
As the renewable energy transition gathers pace, fossil fuel export nations like Saudi Arabia, Russia and Norway currencies may experience shifts. The price of natural gas, oil and renewables will play their role in the FX of these nations. Other geopolitical events, supply chain issues or unforeseen natural disasters could lead to price spikes. Meanwhile, the Energy Information Administration (EIA) expects WTI and Brent to hit $71.60 and $76.06 per barrel on average in 2025.
Cryptocurrencies
With a massive rally in 2024, analysts are bullish on bitcoin with some expecting it to hit $250,000 in 2025. Cryptos tend to rise during easing monetary policies of central banks.
Technological Advancements in Financial Markets
Central bank digital currencies (CBDCs) may impact fiat currencies prices in cross-border payments. China’s e-CNY (digital yuan) continues to develop and other nations might follow their example. We may see the emergence of new currency pairs and trading opportunities.
Meanwhile, integration between blockchain technology and AI in the forex market may improve liquidity, efficiency and transparency. Again, we may see new digital assets entering the forex market alongside traditional currencies.
Geopolitical Impacts on Forex Trading
Trade policies, protectionism, tariffs, and supply chain disruptions will play a major role in forex prices. Currencies will be impacted by changes to trade agreements, any new tariffs introduced or possible trade deals between major economies.
Global supply chains will evolve as companies continue to adjust to post-pandemic economic environment. Technological advancements, AI and supply chains will shape the financial markets which could have great impact on trade-heavy economies like Germany, Japan and China.
Forex Marketing Strategy
Brokers are entering an exciting year with a lot of expected volatility and trading potential. Forex market trends in 2025 will be shaped by central bank policies, inflation trends, geopolitical risks and developments in the energy market. Your traders need to stay informed on these evolving factors to be able to adapt to the dynamic global forex market.
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