The first half of 2025 has brought an economic reckoning for the US dollar, which has suffered its worst performance in over half a century. A 10.8% decline against a basket of currencies since January is largely attributed to the economic policies of Donald Trump, including his tariffs and a budget bill that analysts fear will dramatically increase the national debt. This has led investors to question the dollar’s traditional role as a safe haven.
While the dollar has lost 10% against other currencies, the euro has gained 5%, according to Unicredit. David Morrison of Trade Nation highlights the “chaotic” nature of the Trump administration as a contributing factor. Despite the currency’s struggles, the S&P 500 managed to achieve a record high by the end of June, demonstrating a market that, while volatile, has found reasons to rebound, including anticipation of Federal Reserve rate cuts and strong AI earnings.