The dollar and the first 100 days of Trump’s presidency … the worst performance since Nixon

It seems that the US dollar index is moving on the course of registration for its worst performance during the first 100 days of the US presidency since the era of the late US President Richard Nixon, based on the data dating back to that period when the United States abandoned the gold standard and moved to the free float of the exchange rate.

The US dollar index lost about 9% between January 20 – when Donald Trump returned to the White House – and April 25, putting it on the path of achieving the largest loss until the end of the month since at least 1973. The first 100 days of the presidency of the presidents in recent decades were distinguished by the power of the American currency, as the average returns were approximately 0.9% between 1973, when Richard Nixon began his second term and 2021, when former President Joe Biden took office.

The end of the Bretton Woods system
The measures taken by Nixon in 1971, known as Nixon’s shock, aimed to be a temporary measure, but led to a decrease in the value of the US dollar, which actually ended the Bretton Woods system for the fixed exchange rates that were established after the end of World War II.

During the early stages of his second presidency, Donald Trump carried out many promises of his campaign, imposing new customs duties and increasing his strict dialect against China and other commercial partners of the United States. Its customs duties policy led to investors’ demand for assets outside the United States, which weakened the US dollar and raised the value of other currencies along with gold. The value of the euro, the Swiss franc and the Japanese yen increased by more than 8% for each of these currencies against the US dollar since Trump returned to the presidency.

“The use of the US dollar and its role in trade and international financing was based on deep confidence in American institutions, with low commercial and capital barriers along with a predictive foreign policy. Currently? There are clear indications of the erosion of this confidence that indicates a change in The trends of the distribution of global origins are not in the interest of the US dollar.

Economic recession fears
Trump’s policy initiatives have increased the risk of economic stagnation in the United States with the return of inflation to acceleration, which limits the scope of reduced interest rates by the US Federal Reserve.

Trump’s comments on US Federal Reserve President Jerome Powell – especially his threat to his dismissal – put investors on alert, which exacerbated fears about the independence of the US Central Bank. Trump later stated that he does not intend to dismiss Powell.

As a result, UPS Group reduced its US dollar forecast for the second time in less than two months. Analysts stated that the performance of the US dollar depends on the outcome of the conflict between the United States of America and China, which has not witnessed significant progress in recent weeks.

The US dollar decline
This week, “Deutsche Bank” warned of a declining structural trend for the US dollar in the coming years, which may push the American currency to its lowest levels against the euro in more than one decade.

The speculators, including hedge funds and asset managers, are betting against the US dollar. This group is the most selling over the dollar since October 2024, with a declining bet on the American currency worth about 10 billion dollars during the week ending April 15, according to data issued by the future commodity trading committee.