Investors Divest US Dollar Amid US Policy Chaos. Forecast as of 15.04.2025 | LiteFinance
The US dollar just had its worst first-half performance in over half a century, tumbling more than 10% since January. That’s the biggest drop for the greenback in the first six months of a year since 1973, driven largely by investor fears surrounding Donald Trump’s aggressive economic and trade policies.
What’s Behind the Drop?
The steep fall came as investors lost confidence in the US dollar’s traditional “safe-haven” status. Concerns are growing over President Trump’s massive budget proposals and rising national debt. His unpredictable leadership style and tough tariffs—particularly the so-called “Liberation Day” tariffs—have rattled markets worldwide.
The dollar index, which measures the US currency against a basket of others, sank to its lowest level since March 2022. Meanwhile, the British pound climbed to $1.37, a three-year high.
Analysts Weigh In
According to experts at Unicredit, “The dollar is this year’s biggest loser,” while the euro has gained 5%. David Morrison from Trade Nation added, “Trump’s chaotic administration, tariff wars, and concerns over national debt have made the dollar less appealing.”
And it’s not just Trump’s policies. The Federal Reserve, under pressure from Trump to slash interest rates, is also a factor. Markets are betting on multiple rate cuts soon, which usually weakens the dollar further.
Markets: A Wild Ride
Despite all the turbulence, global markets didn’t collapse. In fact, the S&P 500—the main US stock market index—bounced back to record highs by June’s end. This happened despite a brutal early-April sell-off (the worst week since 2020), triggered by Trump’s tariff announcements. The White House quickly backed off, leading to what investors jokingly call the “Taco trade”—short for “Trump Always Chickens Out.”
Ipek Ozkardeskaya of Swissquote Bank described the rally as being fueled more by investor fear of missing out (FOMO) than any real trade progress. Traders are also optimistic about future interest rate cuts and AI-driven growth.
Winners and Losers
- Winners: European markets outperformed the US. Germany’s DAX is up 20%, while the UK’s FTSE 100 rose 7.2%.
- Losers: Apple lost nearly 20%, mostly due to fears that tariffs on Chinese goods could hurt its US business. In contrast, Meta (Facebook’s parent company) is up 25% thanks to strong AI-driven revenues.
- Safe-haven gold has shined in 2025, jumping 25% as investors sought stability amid global uncertainty.
The Bigger Picture
The first half of 2025 has been anything but calm. Between trade tensions, political drama, rising debt, and global conflicts, the market has gone through a major shake-up. Analysts say we’re seeing a shift in global investment strategy—with the US losing its long-held spot as the go-to destination.
As Dan Coatsworth from AJ Bell put it, “This has been one of the biggest resets in investor behavior in years.”
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