The US dollar’s status as a safe haven is being squeezed, as the currency recorded its worst performance in over half a century during the first half of 2025. Its 10.8% decline against a basket of currencies is largely attributed to Donald Trump’s tariffs and concerns that his economic policies are undermining its traditional role. This signals a significant shift in investor preferences.
Unicredit analysts note the dollar’s 10% loss, while the euro has gained 5%. Chris Iggo of Axa IM Investment Institute observed strong broader market returns despite the dollar’s weakness, with risky assets quickly reversing any sell-offs. The S&P 500, after a turbulent start to the year, impressively surged to a record high by the end of June, indicating that while the currency faces headwinds, other segments of the market are finding strength, driven partly by AI investments.
Safe Haven Squeeze: US Dollar’s Worst Half-Century Performance Signals Shift
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