The first half of 2025 has been disastrous for the US dollar, which suffered its worst performance in over five decades, falling 10.8% against a basket of currencies. This sharp decline is widely attributed to President Donald Trump’s economic policies, particularly his tariffs and a budget bill that analysts warn will further exacerbate the US national debt. The market’s reaction suggests a reevaluation of the dollar’s standing as a cornerstone of global finance.
The euro has gained 5% against the struggling dollar, demonstrating a shift in currency preferences. Concerns about the independence of the Federal Reserve, given Trump’s vocal criticisms of Jerome Powell, have also contributed to the dollar’s vulnerability. Despite the currency’s woes, stock markets presented a mixed picture, ultimately seeing the S&P 500 recover from an early April slump to reach a record high by June. This rebound was fueled by a temporary reprieve on tariffs and the burgeoning interest in artificial intelligence.
