US Dollar Faces Biggest 6-Month Drop in Half a Century

The US dollar is suffering its steepest first-half fall in over 50 years, down 10.8% against a basket of currencies in 2025. 

Global investors are unwinding dollar positions as Trump’s tariff-driven policies, record debt levels, and attacks on Federal Reserve independence rattle confidence. 

The S&P 500 alone lost $5 trillion in market value after April’s tariff announcement, while US Treasuries saw selloffs that pushed yields higher. Though Trump paused some tariffs, lingering uncertainty has crushed demand for dollar-linked assets. 

The OECD slashed US growth forecasts to 1.6% as inflation cooled to 2.3%, down from 3% earlier this year. Meanwhile, gold surged to record highs on central bank demand, reflecting fears over dollar devaluation. 

Trump’s pending One Big Beautiful Bill Act, which aims to extend tax cuts and lift the $36.2 trillion debt ceiling, is raising alarms. Experts project it will balloon US debt by $3.3 trillion by 2034, pushing the debt-to-GDP ratio beyond 124%. Markets are now pricing in two or three Fed rate cuts before year-end to support growth. 

What Does This Mean for Me?

Meanwhile, The euro has climbed 13% to $1.17, while European stocks are up 15%, delivering 23% gains for dollar investors after currency conversion. 

Commodities are also benefiting, with weaker dollar dynamics boosting prices for exporters like Nigeria, Chile, and Indonesia. 

While the dollar’s reserve status remains intact for now, backed by its 57% share of global reserves, investors are clearly diversifying, and more dollar weakness looks inevitable this year.