The U.S. dollar is experiencing its largest annual drop since 2017, influenced by anticipated Federal Reserve rate cuts, fiscal concerns, and trade policies. This trend is expected to continue into 2026, benefiting currencies like the euro and sterling, which have seen significant gains. Concerns also persist regarding the Federal Reserve's independence under the Trump administration, with the president planning to announce a new Fed chair pick. The euro and pound are poised for their largest yearly gains in eight years.