Forex Today: Markets kick off new trading year with a fresh bid in the Greenback

The US Dollar rose to the top of the forex pile on the first day of trading in 2025 as broader markets keep one foot firmly planted in the safe haven currency. Traders may not be the biggest fans of the US Dollar in policy terms, but the USD is still the de facto winner by default amid a global backdrop of wobbly economic conditions.

Here’s what you need to know heading into Friday, January 3

The US Dollar Index (DXY) rallied hard to celebrate the kickoff of the 2025 trading season, rising roughly eight-tenths of one percent and tapping the 109.50 level for the first time since since November of 2022. The only meaningful data of note on Friday’s economic calendar is US ISM Manufacturing Purchasing Managers Index (PMI) survey results, which are expected to hold steady at a contractionary 48.4 for December. A better-than-expected print in weekly US Initial Jobless Claims also helped provide macro support flows in the Greenback.

EUR/USD is already down over 1% in January, tumbling to 1.0250 and slipping into two-year lows for the first trading day of the new year. Hopes for the Euro remain tepid and investors broadly expect the interest rate differential between the EUR and the US Dollar to continue increasing through the first half of 2025. Mid-tier German unemployment figures are due early Friday.

GBP/USD stumbled on Thursday, falling 1.15% on the day and cleanly breaking through the 1.2400 handle, hitting a nine-month low in the process. Cable is set to play second fiddle to other, more important market-moving figures with the UK largely absent from the economic calendar over the next week.

AUD/USD continues to hold on the low end with price action grappling with the 0.6200 region as the new trading year gets underway. The Aussie looked for a technical recovery on the day, but broad-market flows into the Greenback kept AUD/USD pinned near 27-month lows.

USD/JPY is headed back toward familiar highs near 158.00 after an intraday recovery on Thursday. The Dollar-Yen pairing initially opened up 2025’s trading with a downside push, but the US Dollar’s firm bidding strength from across the wider market helped to reverse course and keep USD/JPY near six-month highs.