USD Forex Pair Opportunities and Risks to Watch in 2025

The first half of the year has already seen some remarkable volatility in the FX market. Most of the market moves can be traced back to President Trump’s policies and the ongoing discussions around monetary policy in key economies.

The volatility is expected to continue in the second half of the year, with Trump threatening new tariff hikes that target 14 countries. It's therefore essential for short and long-term traders to find the most favorable USD pair setups and stay aware of the key risks ahead.

Global Economic Factors Impacting USD Forex Pairs

The US Dollar (USD) is regarded as the world’s reserve currency. It's also the default currency for financial platforms such as the TradingView app. This puts the USD at the center of the financial world, with its currency pairs being some of the most actively traded and closely watched.

So far this year, USD forex pairs have been heavily influenced by a complex web of global economic factors. Many analysts expect this to continue at the same rate in the next six months. Here's an overview of the global economic factors.

Interest Rates

It will be almost impossible to talk about the US currency movements without mentioning the Federal Reserve. As of June 2025, the interest rate is set between 4.25% and 4.50%. Jerome Powell continues to remain cautious after substantial 2024 rate cuts.

How, then, does the interest rate affect the forex pairs? A higher rate strengthens the USD, as foreign investors are attracted. A low rate, on the other hand, weakens the USD against other currencies as capital flows decrease.

Inflation

The US inflation rate notably skyrocketed from 2022 to 2023. This affected the USD's purchasing power and its value compared to other major currencies.

Although it is currently at 2.4%, inflation is still a key concern. Inflationary pressures persist mostly in services. The Fed, however, is trying to balance growth and price stability within the economy. This will positively influence the trajectory of the US Dollar.

The forex market always reacts to inflation updates. If investors anticipate rising US inflation, they are likely to sell their USD assets. A massive sell-off leads to depreciation of the USD compared to its currency pairs.  

Geopolitical Events

Since Trump's inauguration in January, there have been trade war tensions, most notably with China. This is expected to escalate further, as Trump plans to increase tariffs for 14 nations. The deadline is set for August 1 and would affect the currencies of the listed countries. This includes the Japanese Yen and South Korean Won.

Aside from the tariffs, instability in the Middle East and OPEC+ decisions could drive oil price volatility. This will affect energy-linked currencies like the Canadian dollar.

Lastly, Russia-NATO tensions could lead to economic sanctions. This adds to global market uncertainty and will influence safe-haven flows into or out of the USD.

Top USD Currency Pairs to Watch

2025 top USD forex have high liquidity, global relevance, and sensitivity to major market drivers. Here are five pairs to monitor this year:

• EUR/USD (Euro/US Dollar): This is ranked #1, as the world’s most traded pair. EURUSD is shaped by the US and Eurozone central bank policies and economic data.
• USD/JPY (US Dollar/Japanese Yen): For most investors, the USDJPY is a safe-haven pair. It's influenced by interest rate differentials and risk-off sentiment.
• GBP/USD (British Pound/US Dollar): This pair's popularity is based on the status of the UK and the US as world powers. You can, however, expect little to no movement as the pound’s performance is closely tied to Brexit-related news. 
• USD/CHF (US Dollar/Swiss Franc): Switzerland is popular for producing some of the best watches and chocolates. To traders, however, its popularity lies in its robust banking system. This makes the USDCHF a safe haven during market turmoil.
• USD/CAD (US Dollar/Canadian Dollar): This pair is heavily influenced by oil prices and US-Canada trade relations. At the moment, CAD is gaining strength. This reflects Canada's favorable domestic economic conditions.

Note that the listed currency pairs are in no order. Also, the FX market is volatile; therefore, the pairs should be monitored regularly to stay up-to-date.

Risks Traders Should Prepare For

The unpredictable nature of the forex market makes it a highly risky venture. It's in your best interest to know the associated risks before purchasing a USD pair. Here's an overview of the major perils;

• Market sentiments: The movements of the USD are influenced by key indicators such as employment data and GDP growth. Disappointing figures in these sectors could trigger sharp declines in currency value.
• Geopolitical and trade risks: Regional conflicts and trade wars tend to lead to high market volatility. Although the USD is mainly a safe haven during this period, the US economy and partners might take hits. This eventually affects your investments.
• Data surprises: Unexpected news, such as surprise central bank decisions, can trigger rapid market moves.

Navigating the USD Forex Market in 2025

The goal of every trader is to become successful. However, this doesn't happen overnight. To attain success, one must be disciplined in risk management and have a unique strategy.

If you are a beginner, it's best to learn about the forex market before purchasing USD currency pairs. You can use tutorials (blogs or videos) and demo trading apps to test your skills and seek professional help.

The most important strategy, however, is to stay informed. Regularly monitor economic calendars, news, and geopolitical developments. This enables you to anticipate and react to market-moving events.

Key Takeaways for USD Forex Trading

The next six months offer interesting opportunities for investors willing to capitalize on USD forex pairs. However, some risks could hinder these opportunities. It's best to take note of them and have counter-strategies.