J.P. Morgan Research unveiled its 2025 forex outlook on November 18, 2025, forecasting a robust U.S. dollar rally to new highs, driven by post-election policy fallout, widening U.S. growth gaps versus global peers, and persistent inflation rotations. This bullish USD stance—projecting DXY above 105 by mid-year—stems from anticipated fiscal stimulus under the Trump administration, including tax extensions and tariff hikes, tempering Fed cuts to just 50 basis points in 2025 while ECB and BoJ ease more aggressively. As global growth slows to 2.8% annualized, EM currencies face headwinds, with EUR/USD eyed at 1.05 and USD/JPY at 150, per the report, underscoring classical drivers like cyclical differentiation and valuations in a fragmented landscape.
Election echoes amplify the narrative: November’s outcome has slashed global expectations, with U.S. GDP at 2.5% contrasting eurozone’s 1.2% and Japan’s 1.1%, per JPM projections. Commodities play a disinflationary role, yet gold’s multi-year bull—forecast at $3,000/oz by Q4 2025—bolsters safe-haven bids, indirectly pressuring non-USD pairs. Fed’s QT taper to $35 billion monthly and hawkish pause at 4.75% widen yield spreads, with 10-year Treasuries at 4.1% versus bunds at 1.9%. Reserves at $620 billion buffer fiscal risks, yet tariff tensions—25% on Chinese tech—project 0.5% EM growth shave if unchallenged.
Technically, DXY’s ascent carves a bullish channel from October’s 100 low, RSI at 62 upward amid 28% volumes. Support at 102.00—50-day EMA—resistance at 104.50 tests November pivot. Above 105.00 targets 108.00 Fib, sub-101.50 risks 100.00 base. Volatility at 12% awaits December FOMC.
This dollar-dominant outlook cascades to equity proxies, lifting S&P futures 0.8% on deregulation cheers, while hedging EM bonds. For investors, it spotlights USD’s primacy in diversified portfolios. As 2026 looms, JPM’s vision narrates strength: dollar dominance versus global drift. Track December 12 ECB—dovish cuts could propel DXY to 106, etching policy as forex’s pivotal propeller.
