The US dollar has fallen to its weakest level since early 2022, after President Donald Trump dismissed concerns about the slide. Investors have responded by seeking safer assets, with gold and the Swiss franc reaching multi-year highs.
The greenback’s fall, driven by mounting policy uncertainty and sharp political rhetoric, marks its most pronounced drop in years. As global traders adjust to Washington’s mixed signals, the shift is being felt across financial markets, from currency pairs to commodities.
Growing geopolitical tensions and a volatile economic policy environment in the United States have prompted traders to shed dollar holdings in favor of alternative stores of value. The response has been swift, with the dollar declining 1.3% on Tuesday and extending its slide the following day.
The drop also coincides with rising speculation over the independence of the Federal Reserve, ahead of its upcoming rate decision. President Trump’s repeated calls for lower rates, along with threats directed at Fed Chair Jerome Powell, have added to the pressure.
Trump Dismisses Dollar Slide amid Global Investor Reaction
The US dollar has now fallen by 10% over the past year, slipping to levels last seen in February 2022. The most recent drop came after President Trump stated during a visit to Iowa that he was unconcerned by the currency’s depreciation. “No, I think it’s great,” he told reporters, as reported by The Guardian, while promoting his economic record.
This marked the largest one-day drop in the dollar since last April, when Trump unveiled a sweeping tariff proposal that triggered a global market sell-off. Analysts noted that the current decline has been exacerbated by erratic foreign and trade policy signals. According to Reuters, the administration’s stance has left investors uncertain about any backstop for the currency.
The dollar’s weakness has pushed rival currencies to multi-year highs. The Swiss franc, traditionally considered a safe haven, has reached its strongest level against the dollar in over a decade, while the euro climbed to $1.20, marking its best week in nearly a year. According to Reuters, the Australian dollar and British pound also gained ground, supported by capital flows shifting away from the US.
Market analysts suggest Trump’s apparent support for a weaker dollar could be part of a broader strategy to support US exports and stimulate growth ahead of mid-term elections. Prashant Newnaha of TD Securities stated that the President appears to be “green lighting selling the dollar,” adding that the approach aims to run the economy “hot” while sidestepping the Fed.
Fed Independence Questioned as Haven Demand Lifts Gold, Yen
In parallel with the dollar’s decline, investors have rushed into traditional havens. Gold prices broke above $5,200 an ounce for the first time, extending a rally that has seen the metal rise nearly 90% since Trump’s second inauguration, according to The Guardian. The yen also saw significant strength, rising by up to 3% over two sessions amid reports of possible coordinated intervention between Japanese and US authorities.
Currency market participants remain focused on the Federal Reserve’s next move. The central bank is widely expected to hold rates steady, despite ongoing pressure from the White House. Trump has repeatedly criticized Fed Chair Jerome Powell, even threatening to remove him from office. The Justice Department has opened a criminal inquiry into renovations at the Fed’s headquarters, adding further strain to the institution.
Concerns over central bank autonomy have unsettled global markets. Some traders interpret the administration’s actions as an informal form of currency intervention. Marc Chandler of Bannockburn Global Forex noted “That means that in the past, say, three sessions, you’ve had the Treasury Secretary of the United States and the President of the United States seeming to give people carte blanche to sell the dollar.”
These developments have amplified investor demand for hard assets, including precious metals and emerging market currencies. As currency volatility persists, analysts say confidence in the dollar’s status as the world’s reserve currency is being tested, at least in the near term.
