As U.S. equities stumbled this month, something rather peculiar happened. The dollar—usually the market’s comfort blanket when things go awry—didn’t just fail to rise; it sagged like a forgotten soufflé. Investors instead darted for gold, the yen, European equities—frankly, anywhere but the land of stars and stripes. The dollar should be the safe haven here. And it’s not.

Behind this reversal in fortune looms a familiar disruptor: President Donald Trump. Just months into his second term, his fervent embrace of tariffs and crusade against globalisation has done what few could—shake confidence in the world’s reserve currency.
Over the past three months, the dollar has weakened against nearly every major currency, bar a few exceptions, pushing the Bloomberg Dollar Index down nearly 3%—its worst start to a year since 2017. Gold, ever the go-to for nervous capital, has surged past $3,000 an ounce. Speculators have started shorting the dollar, alarmed that Trump’s erratic policies could steer the world’s largest economy straight into recession.

The dollar’s muscle memory remains strong after years of rate hikes and American economic outperformance. Its dominance in central bank reserves and global commodities like oil still lends its weight. But the tremors are real. Trump’s unpredictability has reignited long-standing murmurs: might the world finally begin weaning itself off the dollar?
In Europe, such murmurs have become discussion points. Some leaders see the moment as a chance to elevate the euro’s role—if only they could agree on what a ‘capital markets union’ is actually supposed to look like. In the developing world, coalitions are once again toying with the idea of a dollar alternative, though history hasn’t exactly smiled on those efforts.

Meanwhile, Trump insists he supports the dollar’s global role. He’s also welcomed a weaker currency, arguing it makes U.S. exports more competitive. This contradiction fuels FX volatility and drives analysts to distraction. Trump’s policies—from tariff hikes to talk of acquiring Greenland—could accelerate de-dollarisation.

And yet, despite the drama, the dollar hasn’t lost its throne—at least not yet. In the shorter term, markets are bracing for Trump’s so-called “Liberation Day” on April 2, when another barrage of tariffs is due. Usually, such protectionism might strengthen a currency—less imports and more domestic output, right? Not this time. Traders fear Trump’s moves will instead stoke inflation and smother growth, turning the dollar into collateral damage.

Wall Street, naturally, is twitchy. The S&P 500 has dropped 9% since mid-February, tech valuations are wobbling post-AI boom, and uncertainty is swirling like fog over the Hudson. Meanwhile, European markets—boosted by fiscal rumblings from Berlin—are seeing inflows at America’s expense.
If capital starts fleeing as confidence erodes, we could see a tandem fall in U.S. stocks and the dollar.

So, while the dollar’s crown remains intact for now, the message from the FX world is clear: even empires built on greenbacks are not immune to political risk, especially when the emperor has a fondness for tariffs and a disdain for predictability.