The US dollar is in a downward spiral, experiencing a historic sell-off in the first half of 2025 that marks its worst performance in over 50 years. A 10.8% drop against a basket of currencies since January is a direct consequence of President Donald Trump’s economic policies, including his tariffs and the looming increase in national debt from his “big beautiful” budget bill. This has led to a significant erosion of investor confidence in dollar-denominated assets.
The euro has gained 5% against the struggling dollar, as noted by Unicredit. David Morrison of Trade Nation emphasizes the “chaotic” nature of the Trump administration and concerns over US national debt as primary factors. Despite the dollar’s struggles, the S&P 500 of US stocks managed to reach a record high by the end of June, reflecting a market that, while reactive to policy, also finds underlying strength in areas like technology and AI, and the “Taco” trade sentiment.