Donald Trump has been stirring up markets throughout the year, not only through tariffs, but also through his peace diplomacy and pressure on the Fed. How has this affected Forex, and what lies ahead? Let’s discuss this topic and make a trading plan.
The article covers the following subjects:
Major Takeaways
- The US dollar may strengthen in 2026.
- Failed diplomacy in Ukraine favors long trades in USDRUB, USDHUF, USDPLN, and USDCZK.
- Changes to USMCA terms or tariff removal create conditions for long trades in USDMXN.
- Monetary policy provides an opportunity to buy AUDJPY and NZDJPY.
Yearly Fundamental Forecast for the US Dollar and Other Currencies
Can one person change the world? Maybe the US president can. In late 2024 and much of 2025, Donald Trump’s trade policies roiled the markets. Only near year’s end did Forex return to its usual focus on central banks. Still, the US administration kept up the pressure. Trump’s repeated calls to cut rates to 1% and open criticism of Jerome Powell are keeping markets on edge.
Currency Changes Since the US Presidential Election
Source: Reuters.
Donald Trump’s plans to weaken the US dollar made it one of the worst performers in 2025. The USD index lost about 10% amid concerns about the US economic slowdown stemming from tariffs and the Fed’s easing monetary policy. Against this backdrop, the Turkish lira and the Argentine peso also underperformed.
The Russian ruble, Eastern European currencies, and the Mexican peso posted the best results in 2025. Improving relations between Moscow and Washington following Donald Trump’s return supported the Hungarian forint, Polish zloty, and Czech koruna. As hopes for peace in Ukraine reduced geopolitical risks, investor interest in Russian assets began to recover.
Whether the war will end and whether capital will return to Moscow remain two of the biggest uncertainties of 2026. If diplomatic efforts fail, long positions in USDRUB, USDHUF, USDPLN, and USDCZK are likely to come back into focus.
The Mexican peso benefited in 2025 as most Mexican exports were exempt from tariffs under the North American Free Trade Agreement. As a result, the currency became one of the main winners of Donald Trump’s trade wars. Looking ahead, the removal of import tariffs or a revision of USMCA terms could prompt traders to open long positions in USDMXN.
US Dollar Index During Trump’s Presidency
Source: Reuters.
Despite bearish forecasts, the US dollar is unlikely to fall as sharply as it did in 2025. A repeat would likely require Donald Trump to gain control over the Fed, which appears impossible, especially given the potential boost to the US economy from tax refunds and investment in artificial intelligence. History shows that Donald Trump tends to scale back his policy pressure after the first year in office. In 2018–2019, this shift helped the dollar recover and strengthen following its sharp decline in 2017.
Yearly Trading Plan for AUDJPY and NZDJPY
From a monetary policy perspective, AUDJPY and NZDJPY look attractive for long trades. Australia and New Zealand may raise interest rates, while the Bank of Japan remains on hold, leaving the yen vulnerable.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of AUDJPY in real time mode
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