Dollar index decline sparks questions about the U.S. dollar’s global role as major currencies gain ground and gold rallies 28% this year.
The U.S. Dollar Index, which tracks the greenback against six major currencies, has slid sharply this year, raising questions about the dollar’s long-standing status as a global safe haven. The Intercontinental Exchange’s Dollar Index (DXY) stood at 98.64 this week, down 9.08% year-to-date amid broad gains by its constituent currencies.
Among the six benchmarks, the euro commands the largest weight. It has surged 10.03% against the dollar, trading at $1.1484 per euro—the strongest since April 22. The Japanese yen, representing 13.6% of the index, has climbed 8.26%, reaching 144.28 yen per dollar. The pound sterling, with an 11.9% weighting, has appreciated 7.73%, trading at roughly £0.7363 per dollar. Meanwhile, the Canadian dollar, at a 9.1% weight, is up 4.97%, exchanging at CAD 1.367 per USD.
Smaller components also posted significant gains. Sweden’s krona jumped 13.71% to 4.20 SEK per dollar, while the Swiss franc appreciated 9.77%, trading near CHF 0.8175. These moves have collectively dragged the DXY lower, reflecting broad confidence in non-U.S. currencies.
Analysts at Barclays noted that the currency shifts hint at deeper market concerns. “Overall, worries about fiscal deterioration, rising U.S. debt issuance, tariff uncertainty and weakening institutions have pushed investors to demand a higher premium on U.S. assets,” Barclays said in a statement. Yet the bank also argued that America’s underlying economic strength and more flexible fiscal stance should help preserve the dollar’s dominant role.
The dollar’s slide has fueled a parallel surge in gold prices, which have jumped roughly 28% so far this year. Many central banks appear to be diversifying away from dollar reserves, snapping up bullion as an alternative store of value.
Despite the recent softness, a range of factors could prompt a dollar rebound. Upcoming U.S. economic data, shifts in interest rate expectations and geopolitical developments all have the power to reshape investor sentiment. For now, though, the currency complex suggests that far from offering a refuge, the dollar faces growing competition from its peers—and that investors are casting a wary eye on America’s fiscal outlook.
