🔺🔻The Dominant FX Theme Extends Gains Into Year-End: Cable FX Macro
- Rosbel Durán
- a few seconds ago
- 1 min read
The G10 currencies experienced significant USD weakness throughout much of 2025, with the US Dollar Index declining sharply in the first half of the year (down ~10.7% by mid-2025, its worst H1 performance in decades) before stabilizing and trading in a narrower range since July/August.
The dollar has remained soft on Fed rate cuts and dovish pricing, reduced U.S. exceptionalism fears, foreign hedging and repatriation. Sentiment, macro ranking, and seasonals (DEC-FEB) all favour taking positions vs the dollar.
However, the short USD trade has not been the only view working this year. Our FX RS tool will provide a snapshot of what has been outperforming/underperforming in the G10, looking back 120-days. This guidance helps traders determine trades that are more likely to work under the current regime. Short yen vs G10 has been a good bet over the last 120-days and this is extending on Friday session as G10FX records gains above 1.0% vs JPY.
We have been through this regime since January, if I had shown you the relative strength metrics back in August, the results would have looked very similar to December. In fact, all currencies are set to close in gains vs the yen in 2025, SEK and CHF lead the G10FX at 19.5% and 14.2%, respectively.
Of course, it is important to do your discretionary process before simply following past performance. If you're a systematic directional trader (like me), the FX RS tool will not guide your book, but it is extremely useful to keep in mind when we ask “what is working?”
