Despite 2025 Pullback, Dollar Still Anchors the Global Forex Market

Key Points

• The U.S. dollar has fallen roughly 10% in 2025, yet it remains on one side of nearly 90% of all global FX transactions—underscoring its enduring role as the backbone of the currency market.
• Recent data shows the dollar’s share of global reserves has barely moved, signaling that central banks and institutions remain firmly anchored to the greenback.
• For traders, the takeaway is clear: the dollar’s price may fluctuate, but its status as the world’s reference currency remains intact, keeping dollar pairs at the core of global FX trading.

The U.S. dollar may be down in value, but its grip on global finance remains firm. After a roughly 10% decline against a basket of major currencies in 2025—its steepest slide in decades—the greenback still anchors the world’s trading and reserve systems. For traders, that dominance shows up in the unmatched liquidity of dollar pairs; for central banks, in their continued dependence on the greenback for reserves. Prices may fluctuate, but the architecture of global finance still leans heavily on the U.S. dollar.

Recent data reinforces this reality. For example, the Bank for International Settlements’ (BIS) Triennial Central Bank Survey showed that the U.S. dollar remains on one side of nearly 90% of all global FX transactions, while new International Monetary Fund (IMF) reserve data confirmed that the dollar's share of central bank holdings remains firm. Together, these findings highlight a consistent theme: even as global currency flows evolve, the dollar remains the world’s critical reference point—anchoring trade, finance, and monetary policy.

We dig into the details below.

The Greenback Remains the Backbone of the Global Forex Market

One of the clearest signs that the dollar’s grip on global finance remains intact comes from the foreign exchange market itself. Every three years, the BIS Triennial Survey takes the pulse of global forex activity, and the latest data from April 2025 confirms that the greenback remains the backbone of the system. For traders, the takeaway is straightforward: even when the dollar weakens, its influence doesn’t fade—the currency continues to shape liquidity, pricing, and strategy across the globe.

That dominance shows up in the numbers. The dollar was on one side of 89.2% of all FX trades, up from 88.4% three years ago. Because every forex transaction involves two currencies, the reported shares add up to 200% instead of 100%—which is another way of saying the dollar is almost always in play. All of the top 10 most traded pairs still feature the greenback, with notable gains in USD/CNY, USD/CHF, and USD/HKD.

The BIS data also underscores how the global forex continues to grow. In April 2025, global FX turnover surged to a record $9.6 trillion per day—up 28% from 2022. Much of that jump was fueled by tariff shocks and renewed economic uncertainty in the first half of the year, which sparked volatility and a wave of hedging activity. For traders, those dynamics created fertile ground for opportunity, with dollar pairs once again serving as the market’s preferred arena for expressing risk.

The breakdown of that record activity adds even more context. Spot trading—the most direct way to buy and sell currencies—climbed 42% to $3 trillion per day, as traders leaned into short-term opportunities amid heightened volatility. Forward contracts surged even more, rising 60% to $1.8 trillion per day, as asset managers and institutions rushed to hedge exposures and lock in exchange rates against further dollar weakness.

The geographic footprint of global FX trading adds another layer of insight. Liquidity remains heavily concentrated in a handful of major hubs: the U.K. and U.S. together account for 57% of global turnover, while Singapore has emerged as a powerhouse at nearly 12%, and Hong Kong holds steady around 7%. These centers matter not only for their scale but for the tight spreads, deep liquidity, and broad counterparty access they provide—core advantages for traders determining where and how to deploy capital.

Taken together, the survey underscores a clear reality: the dollar’s price may move, but its dominance in global FX is structural. For traders, the greenback remains the anchor for strategy, risk management, and opportunity—cementing its position as the undisputed king of currencies in global trading.

Global Central Banks Keep Faith in the Dollar

The world’s central banks are still standing behind the greenback. IMF data show the dollar’s share of disclosed reserves holding near 56.3% in Q2 2025, down slightly from 57.8% three months earlier. That figure has drawn attention as the lowest share since 1994. Yet the decline stems largely from valuation effects rather than any meaningful shift in central bank behavior. In short, the dollar’s dominance in global reserves remains intact—even if the headline numbers suggest otherwise.

Reserve data can be misleading because they’re reported in U.S. dollars—so the dollar’s own depreciation distorts the picture. With the greenback down more than 10% against a basket of major currencies in the first half of the year, the dollar value of euro, yen, and franc reserves naturally rose—even though central banks made little or no change to their actual holdings. When adjusted for these exchange-rate effects, the dollar’s true share of reserves remains essentially flat at 57.7%, with valuation swings accounting for more than 90% of the reported decline.

This is a reminder that central banks don’t just hold dollars—they build their playbooks around them. The greenback still represents nearly three times the euro’s share of global reserves and far outpaces the yen, sterling, and renminbi. And its dominance rests on solid foundations: the unmatched liquidity of U.S. Treasuries, the institutional depth, the rule-of-law framework underpinning American markets, and a central bank capable of opening dollar swap lines when global funding strains emerge. For traders, prices may fluctuate—but the dollar’s status doesn’t. It remains the world’s benchmark currency.

Takeaways

The dollar’s 10% slide in 2025 has fueled talk of decline, but the evidence tells a different story. In the world of currency trading, the greenback remains on one side of nearly 90% of all FX transactions, and among central banks, its share of global reserves is virtually unchanged once valuation effects are stripped out. In short, prices move—but power doesn’t. The dollar’s role as the world’s anchor currency remains deeply embedded in how markets trade, hedge, and store value.

Looking ahead, the next catalysts will come from the dollar’s home turf. Upcoming inflation data and the Federal Reserve’s late-October meeting are poised to set the tone for the USD heading into year-end. A hotter CPI print or a more cautious Fed could reignite a rally, while softer readings may deepen bearish sentiment. The real wild card, though, is global growth—any resurgence of recession fears could quickly drive safe-haven flows back into the greenback.

But the Fed won’t be the only player moving markets. In late October and early November, a wave of central bank decisions from the ECB, BoJ, BoC, and BoE will follow close behind, giving traders plenty to digest. With the dollar still the world’s common denominator, any divergence in tone or timing could ignite fresh volatility across major pairs—keeping dollar-driven trades squarely in focus.