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Dollar's punishing start to year set to continue

February 25, 2025 (Investorideas.com Newswire) Investorideas.com, a go-to platform for big investing ideas releases market commentary from the CEO of deVere Group.

The US dollar has endured a punishing start to the year, and the factors dragging the greenback lower are unlikely to fade anytime soon.

This is the bearish prediction by Nigel Green, CEO of deVere Group, one of the world's largest independent financial advisory, asset management and fintech organizations, as the global reserve currency recently closed out its worst three-week stretch since September.

He says: "The forces weighing on the dollar - Trump's trade policy, stronger global growth, and political shifts in Europe-are likely to persist, leaving the US currency under sustained pressure for the foreseeable future.

"For investors, this presents both risks and opportunities."

Under Trump's second term, trade policies have shifted but not in a way that has strengthened the dollar.

"While tariffs have been reintroduced in some areas, the sweeping, across-the-board measures that many investors had anticipated have not materialized-at least not yet.

"This has surprised markets. The expectation of aggressive trade restrictions had initially supported the dollar, as investors braced for disruptions that would drive capital toward US assets. But with the administration pursuing a more selective approach-rather than broad, immediate tariffs-the dollar has lost momentum," notes Nigel Green.

Investors remain on edge, though. If Trump moves toward harsher measures, particularly against China and the EU, the greenback could regain ground. For now, however, the policy landscape is exerting downward pressure.

Stronger economic performance outside the US is another major factor working against the dollar.

While the US economy is expected to grow by 2.7% in 2025, other key economies are catching up, with China and Europe showing stronger-than-expected resilience. This is reducing the dollar's dominance as a safe-haven asset.

"Investors are shifting capital away from the dollar into higher-yielding global assets, particularly emerging markets. With risk appetite improving, demand for US currency is falling," comments the deVere CEO.

As long as global growth remains on track and the Fed moves toward easing, the downward trend for the dollar is likely to continue.

In addition, political developments in Europe, often a source of instability that benefits the dollar, are currently working against it.

"Germany's recent election results have boosted confidence in the euro, as a coalition between the Christian Democrats and Social Democrats is seen as stabilizing for the region.

Plus, the ECB's rate cuts weaken the euro initially, but by boosting European assets, they attract capital away from the US, reducing dollar demand. Since the Fed isn't expected to cut rates soon, the dollar isn't strengthening from rate differentials as much as before, keeping it under pressure."

A weaker dollar is shifting investment opportunities, explains Nigel Green.

"US exporters will benefit, as a softer dollar makes American goods more competitive internationally; emerging market stocks and bonds are increasingly attractive, particularly in economies benefiting from strong global growth; commodities like gold and oil tend to rise when the dollar declines, making them key hedges in the current environment; and Bitcoin and digital assets continue to gain traction as alternatives to traditional fiat currencies, particularly as a hedge against dollar weakness."

With the dollar facing sustained pressure, investors should focus on diversification and opportunities outside the US.

The deVere CEO concludes: "Our current base case is that the US dollar will continue its bruising path for the rest of 2025 and investors should consider the profound implications this may have on their investments."

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