The US dollar’s retreat has deepened, with a 10.8% drop against a basket of currencies in the first half of 2025. This significant decline, marking its worst performance in over 50 years, signals a loss of confidence in the dollar, largely due to Donald Trump’s tariffs and the anticipated increase in national debt.
Unicredit analysts confirm the dollar’s 10% loss, while the euro has seen a 5% gain. 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 initial turbulence, 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.