Dollar under fire again as investors reassess Trump policies, geopolitical risk
The US dollar is experiencing renewed downward pressure in early 2026 due to investors reassessing President Trump’s aggressive policies and rising geopolitical tensions. On January 26, it was set for its largest three-day drop against major currencies since April 2025, when Trump’s “Liberation Day” tariffs sparked a selloff.
Trump’s recent actions include threats to control Greenland, new tariffs on European allies, moves to indict Fed Chair Jerome Powell, a Venezuela operation, and a Canada trade embargo warning. These geopolitical moves differ from last year’s more cyclical economic factors, prompting a “Sell America” rethink among investors.
The dollar has weakened 10% in Trump’s first year from erratic trade, Fed criticism, and spending spikes. The Fed eyes two rate cuts, contrasting with pauses or hikes elsewhere, reducing dollar appeal. Currencies like the euro, pound, and Swiss franc are gaining.
Rema Shah of Principal Asset Management notes converging factors beyond a simple “Sell America” trend. Nomura’s Dominic Bunning highlights the shift to antagonistic geopolitical policies over tariffs. Markets remain tense despite some Trump backdowns.
