The US dollar is behaving strangely in recent markets. Normally during stock market drops, investors rush to the dollar for safety. But now, the opposite is happening – the dollar is falling while investors flee to gold, the yen, and European stocks instead.
This unusual pattern stems directly from President Trump’s second-term policies. His increased tariffs and anti-globalization stance are eroding confidence in the currency that has dominated global finance for decades.
In the past three months, the dollar has weakened against most major currencies, with Bloomberg’s dollar index falling nearly 3% – its worst start to a year since 2017. Meanwhile, gold has soared to a record $3,000+ per ounce. By mid-March, traders were actively betting against the dollar for the first time since Trump’s election, worried his policies could cause a recession.
While the dollar remains the world’s primary reserve currency, Trump’s aggressive trade policies are sparking global discussions about reducing reliance on it. European leaders see this as an opportunity to strengthen the euro’s position in international markets.