US Dollar’s Tumultuous Start: Worst H1 Since 1973 Amidst Trade War

The US dollar has had a tumultuous start to 2025, recording its worst first half-year performance since 1973. A 10.8% decline against a basket of currencies is largely attributed to the ongoing trade war initiated by Donald Trump and concerns that his economic policies are eroding the dollar’s traditional safe-haven status. The dollar index has fallen to its lowest level since March 2022.
The pound has surged to a three-year high of $1.37 against the weakened dollar. Chris Iggo of Axa IM Investment Institute observed strong broader market returns in the first half, with risky assets quickly reversing any sell-offs. The S&P 500, despite initial volatility, impressively reached a record high by the end of June, demonstrating a market that, while sensitive to trade tensions, is also driven by other factors like anticipated Fed rate cuts and strong AI earnings.