US Dollar Plummets to Four-Year Low Amid Trump's Comments
The US dollar has tumbled to its weakest position in four years, following remarks from President Donald Trump that downplayed concerns over the currency's decline. This significant drop has prompted investors to seek refuge in traditional safe-haven assets, including gold and the Swiss franc, as market volatility intensifies.
Sharp Decline in Dollar Value
On Tuesday, the dollar experienced a sharp fall of 1.3% against a basket of major currencies, marking its fourth consecutive day of losses. This one-day drop was the largest since April of the previous year, when Trump's announcement of sweeping tariff plans triggered a global market sell-off. The currency slipped a further 0.2% on Wednesday morning, compounding the downward trend.
Over the past year, the greenback has depreciated by approximately 10%, reaching its lowest level since February 2022. This decline comes amid unpredictable US policymaking, including recent threats from Trump to acquire Greenland and impose tariffs on European allies, which have introduced fresh geopolitical shocks into the financial markets.
Trump's Response to Dollar Weakness
During a visit to Iowa to promote his economic record, President Trump was questioned about the dollar's slide. He responded optimistically, stating, "No, I think it's great." When pressed on potential concerns, he added, "I think the value of the dollar – look at the business we're doing. The dollar's doing great." These comments have been interpreted by analysts as contributing to the currency's instability, as they signal a lack of official support for its strength.
Impact on Global Currencies and Assets
The dollar's weakness has propelled several rival currencies to multi-year highs:
- Swiss Franc: Soared to its highest level against the dollar in over a decade, climbing 3% this year after a 14% rise in 2025, as traders flock to this traditional haven.
- Euro: Surged to $1.20 against the dollar, a new milestone, with a 2% gain over the past week—its biggest weekly increase since last April. In 2025, the euro rose 13%, marking its best year since 2017.
- Gold: Continued its historic rally, breaking through $5,200 an ounce to set new record highs. Since Trump's second inauguration just over a year ago, gold prices have jumped nearly 90%, reflecting investor appetite for safety amid political uncertainty.
Market Analysis and Future Outlook
Steve Sosnick, a market strategist at Interactive Brokers, noted that a weaker dollar presents a mixed picture. "A weaker dollar is a two-sided coin," he explained. "If you have operations around the world and foreign currency revenue that will have a conversion advantage when you turn it into US dollars, that will be good. On the other, it makes imported goods more expensive and there might be some inflationary impact from that."
Looking ahead, some analysts anticipate further dollar weakness due to ongoing presidential pressure on the Federal Reserve, combined with concerns about the US economic outlook and its rising debt burden. The Fed is set to announce its first interest rate decision of the year on Wednesday, with expectations that rates will remain on hold despite Trump's repeated calls for cuts.
Federal Reserve Under Scrutiny
The situation is complicated by tensions between Trump and Federal Reserve Chair Jerome Powell. Trump has publicly criticised Powell, calling him "stupid" and threatening to dismiss him. Additionally, the Justice Department has opened a criminal investigation into Powell regarding renovations to the Fed's headquarters.
With Powell's term as chair due to expire in May, Trump could name a successor shortly after the interest rate decision, adding another layer of uncertainty to monetary policy and currency markets.
