The US dollar is falling at a record pace in 2025 and is down close to 11% year-to-date. The DXY index, which measures the performance of the greenback against a basket of six leading currencies has dipped to 96.6 levels. It is one of the steepest declines since 1973 and failed to recover even after the stock market hit new highs. Dow Jones, Nasdaq Composite, and the S&P 500 index surged nearly 5% YTD but the USD is moving in reverse.
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Why Is the US Dollar Falling in 2025?
Unpredictable economic policies from the White House have led to a mass sell-off of the US dollar in 2025. Its role as a safe-haven is being threatened not by others but from the corridors of the White House. Trump’s trade wars and tariffs, and a 90-day pause on tariffs eroded trust in the greenback.
Trump’s erratic move is facing a global revolt as investors remain wary of holding US dollar-backed assets in 2025. Big institutional money is being poured into developing countries for profit rather than the US this year. China is ruling the roost by leveraging the angst against the White House and pushing the yuan ahead for trade.
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In addition, economists are worried about Trump’s ‘Big, Beautiful Bill’ as it passes through the Senate. Bloomberg explained that the Senate tax bill would cost the bottom 20% about $560 to $700 annually, while boosting the top 20% by $5,700 to $6,055. The bill favors high earners and allows money to move from the bottom to the top. Apart from the tariffs, and trade wars, the new tax bill could make the US dollar further decline in 2025.
In conclusion, all these developments are making the US dollar a less attractive investment in 2025. Chances are high that the USD could dip further by the end of the year and fall to multi-year lows. US-based financial assets like Treasuries and bonds are losing their dominance to other monetary resources.