The changing face of FX trading in 2025: Trends, challenges, and the push toward automation

Key Takeaway

• FX trading is experiencing greater volatility due to trade wars and ongoing conflicts in the Middle East and Ukraine.
• Fund managers and corporates are still too heavily reliant on manual FX processes.
• They need to accelerate investments into automation and new tools to become more efficient and competitive.

FX traders have been put through their paces as they try to navigate today’s tumultuous $7.5 trillion-a-day currency market. Volatility has been a hallmark since Covid and the ensuing spike in inflation, but few were prepared for the recent high-octane turbulence. As a result, corporates and fund managers are reviewing their traditional approaches to FX and seeking holistic, flexible solutions across the trading, trade and risk management, and operations spectrum.

Geopolitics is driving change

Dramatic developments in 2025 explain why markets have become so challenging to circumvent. April saw trading volumes surge by 13 percent in the wake of Donald Trump’s tariffs and the resulting threat to global trade. Each of the leading eFX venues surveyed by FX News Group (FNG) – FXSpotStream, Cboe FX, EuronextFX, and 360T – saw activity jump between 4 and 21 percent during the month.

Fast-forward four weeks, and the same four platforms saw double-digit decreases of between 17 and 27 percent because of low volatility and a lack of market-moving events. Uncertainty over central bank policies, particularly from the Federal Reserve and Bank of Japan, led to institutional players taking a wait-and-see approach. Similarly, traders preferred to stay on the sidelines due to the absence of major geopolitical events and economic data releases.

This behavior reflects the shifting dynamics in the FX market, which is impacted more than most by macroeconomic trends. In the past, recessions or growth patterns were the main drivers of activity, but today, geopolitics takes center stage. This includes the ongoing conflicts in Ukraine and the Middle East, and vacillating policy announcements from the Trump administration, particularly on trade. In fact, a report in Bloomberg shows that FX market volatility since the US election is outpacing that in rates for the first time in the post-pandemic era. In recent years, shorting volatility was a more likely bet.

Reliance on manual FX processes is stunting progress

According to the MillTechFX Global FX Report 2025, the pattern is expected to continue putting additional pressure on fund managers. The survey – which polled 1,500 senior finance decision-makers at corporate organizations and fund managers across the UK, North America, and Europe – found that respondents are having difficulty managing costs, streamlining operations, and accessing liquidity more efficiently.

The MillTechFX report attributed these issues to a widespread reliance on manual FX processes despite all the technological advancements seen over the past few years. In the corporate space, 34 percent across all regions still use the telephone, while 32 percent employ emails to instruct FX transactions, making them the top methods globally. Both of these were also cited as the two key instruction methods in the UK and Europe, while sending and uploading files was the most popular in North America.

The results for fund managers were comparable, with about a third deployed email for instructing FX transactions, followed by roughly the same percentage using the telephone and sending or uploading files. UK managers seemed to rely the most heavily on manual processes for their FX operations, with 42 percent executing FX transactions over email and 35 percent over the telephone. In Europe, roughly a third used their own IT systems and sent or uploaded files; while in North America, the favorite routes were via API and online user interface/web app.

Investing in automation technology is a priority

Against this backdrop, it is no surprise that automation is seen as a priority and one of the most impactful technologies for FX operations for both fund managers and corporates over the next five years. Big data and analytics were second in line, with quantum computing and blockchain farther down the list.

The need to upgrade and modernize technology and infrastructure was also underscored in the recent FX Trading 2025 report from Acuiti on behalf of Avelacom, which canvassed senior executives from 68 proprietary trading firms, brokers and banks across Europe, US, APAC, Middle East, and Latin America.

The Acuiti report noted that the industry was ready for a new wave of investment. Most respondents set up their FX trading infrastructure three or more years ago, with 29 percent having done so more than five years ago. Respondents believed that artificial intelligence (AI) and machine learning (ML) are also poised to play a significant role over the next three years in several areas, ranging from data analytics to algorithmic FX execution. They also identified the need to automate FX transaction workflows and processes to mitigate the challenge of rising operational costs.

More movement towards the cloud

In addition, the Acuiti study noted that cloud adoption in FX trading and connectivity infrastructure is gaining in popularity among institutional FX trading organizations as they want to improve their processing power and scalability. Firms are also taking greater ownership of their connectivity with the view that direct access with low latencies would allow them to take advantage of the further growth they expect to see in FX volumes. Over a quarter of those who currently rely on third-party platforms for liquidity sourcing are looking to go down that route and bypass brokerage-led execution to sharpen their competitive edge.