Investfinance.pro – The dollar strengthened on the back of news of trade agreements, which triggered a wave of optimism – market participants took them as a preliminary signal of what the course of events may be in the next 100 days of the Trump administration. However, according to Macquarie analysts, interest in diversifying assets away from the US currency is likely to continue. This is due to ongoing doubts about the ability of the US to reliably fulfill its debt obligations – the so-called “counterparty risk”, which will not disappear on its own.
Macquarie notes that the significant weakening of the dollar in March and April was not temporary, but structural: investors began to perceive the United States as a less reliable financial partner. These fears, despite recent U.S. diplomatic efforts, are not dissipating.
The dollar index has fallen nearly 10% since the start of President Trump’s second term, the largest decline seen in the initial period of the new administration in decades. Such dynamics reflects growing investor skepticism about U.S. assets. The reasons were the White House’s harsh trade policies, domestic political instability, and anxiety over the long-term sustainability of U.S. fiscal and debt policies.
While the next hundred days may be marked by “compromises and negotiations” between the US and its key allies, Macquarie believes that negative structural trends will continue to limit the potential for dollar strength.
“The sharp dollar depreciation seen between February and April is unlikely to be fully recouped, even if the U.S. eliminates all previously imposed tariffs. Without significant political changes inside the country, this process is irreversible,” the research note emphasizes.
In the long term, the dollar may lose its status as the world’s main safe haven currency. The actions of the Trump administration, according to Macquarie, have damaged confidence in U.S. institutional arrangements, including checks and balances. This reinforces the need for global diversification away from the dollar as an underlying asset.
“The USD will increasingly be seen less and less as a non-alternative reserve currency, and increasingly as one of several comparable options alongside the euro,” Macquarie experts conclude.
“This is exactly the risk the dollar will have to face in the future, especially after the end of the current phase of the technical pause in the market,” they noted.