Safe Haven No More? US Dollar’s Tumultuous First Half Undermined by Trump Era

The US dollar’s reputation as a global safe haven has been severely tested, with the currency recording its worst first half in over 50 years. A 10.8% decline against a basket of currencies since January 2025 is directly linked to apprehension over Donald Trump’s economic agenda, including his tariffs and soaring national debt projections. The financial markets have reacted negatively to the perceived instability, causing a significant shift in asset preferences.
Unicredit analysts note the dollar’s 10% loss against other currencies, while the euro has seen a respectable 5% gain. Concerns extend to the independence of the Federal Reserve, as Trump continues to pressure for interest rate cuts. Despite the dollar’s struggles, the broader market witnessed strong returns, with risky assets quickly reversing any sell-offs. The S&P 500, after a volatile period, managed to hit a record high by the end of June, demonstrating a degree of resilience despite the underlying currency weakness.