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The US dollar had its worst beginning of the year since 1973, since Donald Trump’s economic and commercial policies lead global investors to rethink their exposure to the dominant currency of the world.
The dollar index, which measures the force of the currency against a basket of another six, including the pound, the euro and the Yen, fell 10.8 percent in the first six months of 2025, the worst start of the year since the end of the Bretton Woods system backed by gold.
“The dollar has become the scourge child of the erratic policies of Trump 2.0,” said Francesco Pesole, a FX strategist in ing.
The Stop-Stop-Stop Tariff war of the president, the vast needs and concerns of the United States loans about the independence of the Federal Reserve had undermined the appeal of the dollar as a safe refuge for investors, he added.
The currency decreased 0.6 percent on Monday when the United States Senate prepared to start vote on Trump’s “large and beautiful” taxes.
Historical legislation is expected to add $ 3.2TN to the United States debt battery in the next decade and has promoted concerns about the sustainability of Washington loans, causing an exodus of the United States treasure market.
The strong decline of the dollar marks its worst first half of the year from a loss of 15 percent in 1973 and the weakest shown during any period of six months since 2009.
The La Monedas Slide has confused generalized predictions at the beginning of the year that Trump’s commercial war would do greater damage to economies outside the United States while feeding US inflation, strengthening the currency against its rivals.
On the other hand, the euro, that several Wall Street banks were predicting that they would fall in parity with the dollar this year, has increased 13 percent to more than $ 1.17, since investors have focused on the risks of growth in the world’s largest economy, while demand has increased for safe assets in other places, such as German bonds.
“You had a shock in terms of the day of release, in terms of the United States policy frame,” said Andrew Balls, director of global fixed income investments in the Pimco bond group, referring to the announcement of “Trump” reciprocal tariffs “in April.
Balls argued that there was no significant threat to the state of the dollar as a de facto reserve currency in the world. But that “does not mean that it cannot have a significant weakening in the US dollar,” he added, highlighting a change among global investors to cover more of their dollar exposure, an activity that in itself reduces the green back.
Also promoting the smallest dollar this year has increased the expectations that the FED reduces the rates more aggressively to support the US economy, signed by Trump, with at least five expected quarter cuts expected for the end of next year, according to the levels involved by futures contracts.
Betting on lower rates have helped the actions of the United States to shake the concerns and conflict of the commercial war in the Middle East to reach a higher record on Monday. But the weakest dollar means that the S&P 500 continues to lag behind the rivals in Europe when the yields are measured in the same currency.
The great investors, from the pension funds to the reserve managers of the Central Bank, have declared their desire to reduce their exposure to the dollar and the assets of the USA, and questioned whether the currency is still providing a refuge of the swings of the market.
“Foreign investors require greater FX coverage for assets called in dollars, and that has been another factor that prevents the dollar from following the American capital rebound,” said the heavy one of ING.
Gold has also reached this year’s records in the continuous purchase of central banks and other investors concerned with the devaluation of their dollars.
The drop in the dollar has taken it to its weakest level against rival currencies in more than three years. Given the speed of the decrease and popularity of bassist dollar bets, some analysts expect the currency to stabilize.
“A weakest dollar has become a trade full of people and I suspect that the rhythm of decline will slow down,” said Guy Miller, a marketing strategist of the Zurich Insurance Group.
