empty
30.04.2025 12:42 AM
The Dollar Steps on the Same Old Rake

Trust is hard to earn and easy to lose. While markets assess Donald Trump's first 100 days in office, believers in historical signs point to an event in late April 1925. One hundred years ago, Winston Churchill made what is widely regarded as the greatest monetary policy mistake in history — he tried to return the British pound to the gold standard. The result? The era of sterling dominance came to an end. Could this be a sign that the U.S. dollar's throne is beginning to shake?

The greenback is used in around 90% of cross-border transactions, significantly more than its share in global central bank reserves or the U.S. share of global GDP. The dollar functions as the "plumbing" of the global financial system, so expecting it to be dethroned outright would be naive.

U.S. Dollar Performance

This image is no longer relevant

What is more realistic is the beginning of a long-term downtrend in the USD index. Indeed, the last sustained upward trend began when the U.S. credit rating was downgraded in 2011. Trust gained, and trust lost — these are not empty words!

Due to White House policy, doubt surrounding the U.S. dollar and American assets in general have emerged. Former allies have become Washington's arch-enemies, while a long-standing adversary — Russia — is now nearly a close friend. Can one realistically expect China and Japan to keep buying U.S. Treasuries when massive tariffs have been imposed on both nations? Unsurprisingly, investors have turned away, and the USD index has shown the worst performance ever during the first 100 days of any presidency. Under Donald Trump, the dollar has fallen by 10%, a mirror image of events when Ronald Reagan entered the White House.

USD Dynamics Under Various Presidents

This image is no longer relevant

U.S. stocks are rebounding as April ends, but the dollar refuses to follow suit. According to Danske Bank, it would be naive to think that the peak of political uncertainty is behind us. The current 90-day grace period is only temporary, after which trade conflicts are expected to escalate. Trump is not one to back down. He intends to use tariffs to fill the budget gap caused by extending the tax relief period.

The Tax Foundation believes this is impossible. This conservative group estimates that tariffs will bring in $167 billion in 2025. But in 2022 alone, U.S. households earning less than $179,000 per year paid $600 billion in income tax.

This image is no longer relevant

The math shows that Trump's plans are unrealistic — but that doesn't stop the U.S. president.

Technically, on the daily chart of EUR/USD, bulls have made a second attempt to break through resistance at 1.14 and push the pair out of its short-term consolidation range. So far, everything is going according to buyers' plans. However, for the rally to continue, the pair needs to break through the local high at 1.1425, which would open the door to further long positions.

Marek Petkovich,
Analytical expert of InstaTrade
© 2007-2025

Recommended Stories

EUR/USD. Analysis and Forecast

On Thursday, the EUR/USD pair is falling below the psychological level of 1.1300. The election of Friedrich Merz as Chancellor of Germany reduces uncertainty regarding the economic strength

Irina Yanina 11:12 2025-05-08 UTC+2

The Market Will Save Itself

The Fed is no longer the center of the financial universe, and the S&P 500's 13% rally from April lows has once again made U.S. equities expensive. That sums

Marek Petkovich 10:13 2025-05-08 UTC+2

Fed's Rate Hold and US-China Talks Support the Dollar (High Likelihood of EUR/USD and Gold Declines)

The Federal Reserve remained firm, with its leadership reaffirming a steadfast wait-and-see approach. Interestingly, the Fed did not respond to notable changes in the economy, citing heightened uncertainty

Pati Gani 09:53 2025-05-08 UTC+2

The Bank of England Is Ready to Cut Rates

The Bank of England is expected to cut interest rates by a quarter of a percentage point today and signal that another reduction is likely in June. This could potentially

Jakub Novak 09:21 2025-05-08 UTC+2

Why Gold Dropped Sharply After the Fed Meeting

Gold experienced a slight uptick following the Federal Reserve's meeting, where interest rates were kept unchanged and Fed Chair Jerome Powell stated that the central bank is in no rush

Jakub Novak 09:17 2025-05-08 UTC+2

FOMC Meeting Results

The euro and British pound resumed their decline against the US dollar following the release of the Federal Reserve meeting results; however, the drop was not significant, and the future

Jakub Novak 09:15 2025-05-08 UTC+2

What to Pay Attention to on May 8? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic events are scheduled for Thursday, and none are significant. Germany will release its industrial production report for March, and the U.S. will publish weekly jobless claims. These

Paolo Greco 06:05 2025-05-08 UTC+2

GBP/USD Overview – May 8: The Tesla Crisis as the Apex of Trump's Policy

The GBP/USD currency pair traded relatively calmly for most of Wednesday despite the evening FOMC meeting. As per our usual approach, we won't be analyzing the results of that meeting

Paolo Greco 03:39 2025-05-08 UTC+2

EUR/USD Overview – May 8: A First Step Toward De-escalation?

The EUR/USD currency pair continued to trade sideways for most of Wednesday. There was a minor upward movement, but as a reminder, the pair has now been range-bound for three

Paolo Greco 03:39 2025-05-08 UTC+2

EUR/USD: Awaiting the Geneva Meeting

The EUR/USD pair continues to trade within a narrow price range ahead of announcing the Federal Reserve's May meeting results. Although the outcome is largely predetermined (the central bank

Irina Manzenko 00:47 2025-05-08 UTC+2
Can't speak right now?
Ask your question in the chat.
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaTrade anyway.

We are sorry for any inconvenience caused by this message.