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"Markets are losing confidence in the US economy's resilience and in the Dollar as a safe-haven"

ended 10. March 2025

The greenback is under pressure, with the first week of March proving the Dollar’s worst since November 22 and the US Dollar Index (a measure of the Dollar’s value against a basket of currencies) falling by 3.4%. Since Trump’s inauguration, the Dollar is down 5%. Newspage asked forex experts and economists for their views on where next for the greenback. One said: “The U.S. exceptionalism theme that helped the Dollar's 9% rally into 2025 is fading with recent disappointing economic data. This week's inflation data are key, with the Fed increasingly concerned over stagflation as economic activity pulls back whilst inflation persists. Tag-on President Trump's chaotic trade policies and markets are losing confidence in the US economy's resilience and in the Dollar as a safe-haven, favouring gold, the Swiss franc, and Japanese yen instead. EURUSD upside targets of $1.10-12 aren't unimaginable, whilst GBPUSD may test $1.30 should the greenback continue to weaken.” Another added: “Since President Trump returned to the White House, we have seen pretty much all gains erased across stocks, crypto and FX. This is mostly due to uncertainty surrounding tariffs and policy. GBPUSD has hit a new 2025 high of 1.29, and EURUSD rose above the 1.08 level, also the highest for this year due to weakness in the Dollar.”

5 responses from the Newspage community

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Tony Redondo
Founder at Cosmos Currency Exchange
The Dollar’s slump reflects a backlash to Trump’s erratic trade agenda and a US economy creating less jobs than expected and with inflation higher than forecast. The odds on a Fed interest rate cut have risen. The big winner last week was the Euro, which had its biggest single week advance since 2009, the year Germany introduced its debt break. Germany’s €500 billion infrastructure plan and ECB caution on further rate cuts should continue to support the Euro, at least in the immediate term. The Pound also made more modest gains but the state of the UK’s public finances, the tax increases coming into effect in April and global uncertainty will cap much further upside. The 1st of April date is key. Howard Lutnick, Trump's Commerce Secretary, has stated studies on the issue of trade tariffs would be completed by this date.
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Gabriel McKeown
Political & Economics Writer at Sad Rabbit - Substack Newsletter
Trump's tariffs have become a double-edged sword, leaving the once-untouchable greenback to face a crisis of confidence. Caught between the crossfire of tariffs and interest rates, the Dollar’s increasing weaponisation through financial sanctions and growing unpredictability resulting from the administration’s erratic economic moves, has resulted in the currency’s safe-haven appeal eroding faster than many expected. Although this downturn has provided a tailwind for both sterling and the Euro, their respective outlooks remain uncertain. The Pound has benefited from the Bank of England’s reluctance to commit to early rate cuts, but with growth stagnating, sterling’s strength could prove short-lived. Meanwhile, the Euro has been lifted more by Dollar weakness than by confidence in the eurozone itself, with Germany teetering on the edge of recession. Therefore, although a weak Dollar could be America's export lifeline, it also poses significant risks as a global economic wildcard.
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Prem Raja
Head of Trading Floor at Currencies 4 You
Since President Trump returned to the White House, we have seen pretty much all gains erased across stocks, crypto and FX. This is mostly due to uncertainty surrounding tariffs and policy. GBPUSD has hit a new 2025 high of 1.29, and EURUSD rose above the 1.08 level, also the highest for this year due to weakness in the Dollar. Right now the market will be looking for certainty surrounding tariffs and what the Fed will do from a monetary policy perspective, but for now it seems the market are due for more pain before we see things improve. This could see further Dollar weakness and further weakness across stocks and crypto.
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Harry Mills
Director at Oku Markets
The U.S. exceptionalism theme that helped the Dollar's 9% rally into 2025 is fading with recent disappointing economic data. Consumer confidence fell in February, consumer spending dropped the most in four years in January, the manufacturing sector posted a disappointing reading last week and the Atlanta Fed's "GDPNow" tracker has flagged a contraction. Last week's jobs numbers showed a tick higher in unemployment and a soft reading on monthly added payrolls for February. This week's inflation data are key, with the Fed increasingly concerned over stagflation as economic activity pulls back whilst inflation persists. Tag-on President Trump's chaotic trade policies and markets are losing confidence in the US economy's resilience and in the Dollar as a safe-haven, favouring gold, the Swiss franc, and Japanese yen instead. EURUSD upside targets of $1.10-12 aren't unimaginable, whilst GBPUSD may test $1.30 should the greenback continue to weaken.
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Pete Mugleston
Mortgage Advisor & Managing Director at onlinemortgageadvisor.co.uk
Trump’s tariffs have backfired, much like the disastrous Smoot-Hawley Tariff Act of the 1930s, which deepened the Great Depression by stifling global trade. Protectionist policies may sound appealing, but they rarely deliver sustained economic strength. Then and now, tariffs have triggered retaliation, increased business costs, and hurt consumer spending. By restricting imports and disrupting supply chains, Trump’s trade wars have weakened investor confidence in the Dollar and slowed economic growth. If this continues, the U.S. risks further currency depreciation, with Sterling and the Euro potentially gaining as global markets look for more stable economic policies.