As the world braces for Trump's return to the Oval Office, 2025 could usher in the mother of all currency wars, with trade tensions threatening to ignite global markets. The combination of fiscal stimulus, protectionist measures, and a cautious Fed could see dollar dominance 2.0 on the horizon, with the greenback, once again, set to flex its muscles, potentially reaching multi-year highs. The euro is set to bear the brunt of Trump's trade policies, with the ECB likely to respond with dovish monetary measures, leading to the euro potentially flirting with parity against the dollar by the end of 2025.

However, all eyes will be on the Chinese yuan next year, with the currency's fate hanging in the balance between domestic economic pressures and the looming spectre of renewed trade battles. As geopolitical tensions and trade frictions increase, central banks will be forced to navigate treacherous waters, with diverging global monetary policy likely exacerbating currency movements.