In a multipolar currency world, the US dollar has now become a source of constant speculations and challenges. The US dollar has attracted credible foes and enemies, the ones that want to derail its status as a reserve currency. US President Donald Trump is also tightening his stance against global nations, introducing intense tariff policies that are further pushing the nations away from the US dollar. With the trade war narratives catching pace, the US dollar keeps plunging, derailed by a new currency challenger in space.
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US Dollar’s Newest Enemy
The US dollar is now a part of larger currency dynamics, with the American currency battling new challenges. Per the Kobeissi letter, the US dollar index has fallen 3.5% last week, marking the second largest drop since the pandemic in 2020. The index is still showing signs of red, plummeting relentlessly amid new trade war narratives gaining momentum.
“The US Dollar is plummeting: The US Dollar Index, $DXY, fell 3.5% last week, the second-largest drop since the 2020 pandemic. The index is now on track for the third consecutive monthly decline.”
The euro, a long-time currency contender, has primarily driven this new decrease, gaining immense strength against the US dollar lately.
“The majority of the decrease was driven by the euro, which strengthened 4.7% against the USD, its biggest rise since 2009. Even as the trade war has escalated, the US dollar is losing momentum. Another sign of a historic year ahead.”
The US Dollar is plummeting:
The US Dollar Index, $DXY, fell 3.5% last week, the second-largest drop since the 2020 pandemic.
The index is now on track for the third consecutive monthly decline.
The majority of the decrease was driven by the Euro, which strengthened 4.7%… pic.twitter.com/04IRAQDSM1
— The Kobeissi Letter (@KobeissiLetter) March 12, 2025
Why Is the Euro Rising?
The euro is gaining momentum as Trump’s trade war fears have sparked investors to dump the US dollar, fueling the euro’s surge.
“When push comes to shove, Europe gets its act together and cracks on with structural changes: in sum, this is a sentiment and confidence shift and outright currency-positive. Assuming that any tariff impact will not be material, how high can the euro go?” Vaseileios Gkionakis, a senior economist and strategist at the UK fund manager Aviva Investors, later shared
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Why Is the USD Falling?
Trump’s trade war narratives have harmed the USD. Trump’s intense tariff policies have compelled nations to respond aggressively. This includes nations issuing counter tariffs on the US, which is also putting pressure on the American currency.
Dollar’s questionable stance has compelled leading financial giants like Deutsche Bank to issue a statement regarding the USD. In one of its recent notes, the bank stated how the US dollar’s declining stance may jeopardize its status as a reserve currency.
$1.5 trillion Deutsche Bank warns the US Dollar is at risk of losing its dominance. pic.twitter.com/LCYXK5ZynO
— BRICS News (@BRICSinfo) March 8, 2025
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