USD short !?!

How Low Can the US Dollar Go?
After half a year of sharp declines against the euro, the dollar’s future direction is uncertain.


Valerio Baselli
Jul 10, 2025

Key Takeaways
After the dollar’s steepest half-year drop in decades, investors see continued declines ahead.
Receding confidence in the dollar is driving investors to sell dollars and buy gold and other major currencies.
The US currency is unlikely to lose its dominance quickly, even as China’s central bank boosts the yuan.
The first six months of 2025 marked the worst half-year performance for the US dollar since 1991, as mounting doubts about US fiscal strength and capricious trade policy chipped away at the currency’s status as a safe haven. The sharp decline has raised the question of how much further the world’s reserve currency might fall with neither the trade war nor US fiscal anxiety resolved.

The US Dollar Index, which measures the value of the greenback against the world’s six most traded currencies, has lost almost 11% of its value during the first half of 2025. When only comparing first-half periods, the start to this year marked the worst performance since the 1973 oil crisis and the worst half-year since the second half of 1991.

“International investors have become skeptical of the dollar as public debt continues to rise and the White House aggressively pushes for a policy of ‘easy money.’ In addition, concepts such as ‘revenge tax’ or the ‘Mar-a-Lago Agreement’ make international investors uncomfortable,” explains ODDO BHF chief investment officer Jan Viebig.

Indeed, central banks and private investors have been diversifying into other currencies and assets, such as the euro and gold. “Central banks, particularly in China, have been aggressively buying gold to diversify away from the US dollar,” says Morningstar research director Monika Calay, citing net assets in gold ETPs that have reached $326 billion. “This is a clear sign that investors are again turning to gold, driven by its longstanding reputation as an inflation hedge. Gold’s 2025 inflows are being fueled by macroeconomic and geopolitical uncertainty, central bank diversification, and investor anxiety around inflation risk,” she says.

Will the US Dollar Keep Falling?

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https://global.morningstar.com/en-eu/mar...-dollar-go