The US dollar is under immense pressure, experiencing a major sell-off in the first half of 2025, resulting in its worst performance in over 50 years. Geopolitical crises and Donald Trump’s trade war are cited as the primary drivers of this 10.8% decline against a basket of currencies, pushing the dollar index to its lowest point since March 2022. Investors are increasingly concerned about the dollar’s safe-haven status.
The pound has capitalized on the dollar’s weakness, rising to a three-year high. While the dollar struggled, the broader market showed resilience. Chris Iggo of Axa IM Investment Institute noted strong returns in the first half, with sell-offs in risky assets quickly reversing. The S&P 500, after a turbulent journey, achieved a record high by the close of June, fueled by hopes of tariff pauses and the “fear of missing out” on market gains.