US Dollar Under Siege: Worst H1 Since 1973 Amidst Policy Uncertainty

The US dollar is under siege, experiencing its worst first half-year since 1973. A 10.8% decline against a basket of currencies is largely attributed to the policy uncertainty generated by Donald Trump’s tariffs and concerns that his economic agenda is undermining the dollar’s traditional safe-haven role. The dollar index has fallen to its lowest level since March 2022.
Unicredit analysts report a 10% loss for the dollar, while the euro has gained 5%. Chris Iggo of Axa IM Investment Institute noted strong broader market returns despite the dollar’s weakness, with risky assets quickly reversing any sell-offs. The S&P 500, after a turbulent start to the year, impressively surged to a record high by the end of June, indicating that while the currency faces headwinds, other segments of the market are finding strength, driven partly by AI investments and anticipation of Fed rate cuts.