Yearend Seasonality of EUR/USD – Currency Thoughts

Yearend Seasonality of EUR/USD

January 1, 2026

The most widely followed bilateral relationship in the first quarter century of the era of flexible dollar exchange rates was that against Germany’s Deutsche mark. After 1998 the euro assumed the role of dollar performance bellwether when eleven European countries adopted the euro. The number of economies using the euro has since expanded to 21.

The earliest years of flexible exchange rates were characterized by a powerfully consistent downward tendency in the dollar against the Deutsche Mark between mid-December and yearend. In the 14 years starting in 1974 and running through 1987, the dollar fell 13 times, posting an average loss of 1.3% against its European rival. That pattern faded subsequently and was imperceptible in 2005-14 when the average net movement late each year was zero percent.

The long-ago late year pattern may again be relevant. The dollar depreciated versus the euro between mid- and end-December in each of the eight years through 2022, dropping 1.1% in 2016, 2.1% in 2017, 1.2% in 2018, 0.7% in 2019, 0.5% in 2020, 0.8% in 2021, 0.6% in 2022 and 1.3% in 2023. In 2024 and last year, however, the second half of December saw the dollar rise 0.8% and 0.6%.

There also has been a tendency for the dollar during the first half of January to recoup ground lost late in December: “From 1975 to 1988, corresponding to the 1974-1987 late December period mentioned above, the dollar advanced in 10 of 14 years and rose on average by  0.9% against the mark between the yearend closing and January 15” of the ensuing calendar year. Three straight dollar declines during the first half of January occurred in 2015-2017. Also over the decade through 2014, the dollar at the start of each year on average rose by 1.1% against the euro through mid-January. This was followed by three straight dollar declines in early January in 2015, 2016 and 2017. But the tendency for the dollar to appreciate over first half of each January returned in 2018. That year (+0.3%) and in five of the ensuing seven years (0.6% in 2019, 0.4% in 2020, 1.4% in 2021, 0.8% in 2024, and 0.4% in 2025), the dollar gained ground on the euro between December 31 and mid-January. The only exceptions since 2018 were declines of 0.6% in 2022 and 1.0% in 2023.

Copyright 2026, Larry Greenberg. All rights reserved.

Tags: yearend dollar seasonality

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on Thursday, January 1st, 2026 at 6:19 pm and is filed under Foreign Exchange Insights and Next Week.
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