economy
The U.S. dollar is back on top
The U.S. dollar has enjoyed something of a reprieve in recent weeks, regaining its place as a safe haven in times of turmoil. Will it last?
TL;DR
- The U.S. dollar has recently strengthened against major currencies, becoming a safe-haven asset again.
- This recovery follows a significant decline in the first half of 2025, attributed to former President Trump's tariff changes.
- The ongoing Iran conflict has boosted demand for the dollar due to rising oil prices, as oil is priced in USD.
- Traditional safe-haven currencies like the Japanese yen have faltered, while the dollar has strengthened against sterling and the euro.
- Europe's vulnerability to energy price shocks contrasts with the U.S.'s relative self-sufficiency in crude production.
- Analysts express skepticism about the dollar's sustained strength, citing persistent issues like a volatile U.S. administration, large fiscal deficits, and political pressure on the central bank.
- The long-term weakness of the dollar is expected to resume once the current geopolitical crisis normalizes.
- Gold prices have remained flat since the conflict began, despite macro forces that historically support the metal.