The dollar falls for the fifth consecutive trading day, sliding 0.7% as market anxiety grows over America’s global financial leadership. The DXY index, which tracks the greenback against a basket of major currencies, has now dropped over 4% since Trump’s “Liberation Day” tariff announcement in early April.
Confidence in Dollar Begins to Waver
Friday’s trading saw the DXY sink to a three-year low, signaling what some analysts describe as a “scary” shift toward de-dollarisation. Michael Brown, senior strategist at Pepperstone, warned that markets are beginning to price in the possibility of the end of U.S. dominance in global finance.
“This incoherent economic policy, the credibility erosion from constant U-turns, and the governing-by-tweet style are all shaking confidence,” said Brown. “De-dollarisation is now a real, and frankly scary, prospect.”
Trump Tries to Calm Currency Concerns
President Trump attempted to quell concerns late Friday, saying the dollar would always be “the currency of choice.” He insisted that any country backing away from the dollar would return “within about one phone call.”
Despite this reassurance, traders remain skittish after the administration’s chaotic rollout of “reciprocal” tariffs. Though temporarily paused, the threat of renewed trade levies continues to pressure the dollar’s position.
China Tariffs Add to Inflationary Pressure
According to ING analysts, the steep tariffs on Chinese goods are a major factor in the greenback’s recent drop. Since many of the targeted imports lack viable substitutes, the U.S. faces elevated inflation risk, further undermining confidence in its currency.
“The U.S. economy can’t absorb this kind of policy whiplash without market consequences,” ING’s report stated. “If these tariffs return, the dollar will face even more selling pressure.”
Euro Soars While Pound Trails
The dollar’s fall has lifted the euro by 5% since the start of the month. Analysts believe European Central Bank officials are leveraging the uncertainty to position the euro as a viable alternative reserve currency.
Meanwhile, the British pound is up just 2% against the dollar. Analysts attribute its slower rise to the UK’s vulnerability to global economic trends.
Investors Watching Nervously
Though there is currently no real replacement for the U.S. dollar, cracks are beginning to show. As geopolitical and economic instability rise, investors may continue to shift toward other currencies.
“If this trend continues,” Brown warned, “the dollar’s status as the unchallenged global reserve currency may not be as secure as it once seemed.”
