Trump's Talk Sends Dollar Plunging

Investors seek to hedge against currency volatility as Trump's policies and comments weigh on the greenback.

Jan. 27, 2026 at 11:55pm

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The U.S. dollar has seen a sharp decline in recent weeks, falling more than 9% in 2022, as investors grow increasingly wary of holding dollar-denominated assets due to a mix of factors including Trump administration policies, concerns over the Federal Reserve's independence, and the president's own comments on the currency's strength.

Why it matters

The falling dollar has broad implications, boosting the value of other currencies like the euro and Swiss franc, lifting commodity prices like gold, and potentially impacting the returns of U.S. investments for foreign investors. It also raises questions about the stability and reliability of the U.S. dollar as the world's reserve currency.

The details

Investors have been selling the dollar in response to a range of factors, including the Trump administration's apparent willingness to use the currency as a policy tool, concerns that the president's criticism could undermine the Federal Reserve's independence, and geopolitical tensions like the dispute over Greenland. This has sent the euro above $1.20 for the first time in over 4 years and pushed the Swiss franc to a 10-year high against the dollar.

  • The dollar index fell more than 9% in 2022.
  • The euro rose above $1.20 for the first time in over 4.5 years.
  • The Swiss franc reached a 10-year high against the dollar.

The players

Donald Trump

The President of the United States, whose comments and policies have contributed to the dollar's decline.

Jerome Powell

The Chair of the Federal Reserve, whose central bank independence has come into question amid the president's criticism of the dollar's strength.

Australian Retirement Trust

Australia's second-largest pension fund, which is reducing its exposure to the U.S. dollar through hedging while maintaining its U.S. investments.

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What they’re saying

“Imagine holding Treasuries at 4%, but losing 10% on the dollar as a foreign investor.”

— Prashant Newnaha, Analyst (TD Securities)

What’s next

The Federal Reserve and Bank of Canada are both expected to keep interest rates on hold at their upcoming meetings, leaving the focus on how Fed Chair Jerome Powell addresses questions about the central bank's independence.

The takeaway

The decline of the U.S. dollar, driven by a mix of Trump administration policies, concerns over Fed independence, and the president's own comments, is forcing investors to rethink their exposure to dollar-denominated assets and raising broader questions about the stability and reliability of the world's reserve currency.