The US dollar is heading for its worst start to a presidency since the Nixon era, with the dollar index down nearly 9% between January 20 and April 25. That's the weakest 100-day performance in records going back to 1973—marking a sharp reversal from the typical post-inauguration strength investors have come to expect. In contrast, the euro, yen, and Swiss franc have each surged more than 8% as capital flows shift out of the US.
Following a series of aggressive moves—new tariffs, rising tensions with China, and open criticism of the Federal Reserve—President Trump's return to office has triggered investor concerns over both recession risk and the independence of US monetary policy. UBS Group AG recently cut its dollar forecast for the second time in under two months, while Deutsche Bank AG warned that the greenback may be entering a structural downtrend, potentially pushing it to decade-lows against the euro. Hedge funds and asset managers are also repositioning fast, with the largest net short-dollar bets since October 2024, worth nearly $10 billion, according to CFTC data.
Bipan Rai, managing director at BMO Global Asset Management, said the shift goes beyond short-term sentiment: “We sense this is a structural change in global asset allocation.” His view reflects a growing narrative that the dollar's role as the world's reserve currency may be entering a new phase—one marked by weaker trust in US institutions, higher policy unpredictability, and the start of a broader repositioning by global capital.
