Huileng Tan
3 min read
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The US Dollar Index fell 10.8% in the first half of 2025 — its worst performance since 1973.
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The decline is driven in part by the "Sell America" trade amid economic and political concerns.
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A weaker dollar boosts US exports but raises import costs and affects summer travel expenses.
The dollar keeps getting deeper into the bear market as the summer travel season is in full swing.
On Monday, the US Dollar Index ended the first half of the year 10.8% lower. That's its worst first-half performance since 1973, when Richard Nixon was president. At the time, the index fell 14.8%.
On Tuesday, the US Dollar Index was 0.1% lower at 96.75 at 12:57 a.m. ET . The index measures the greenback against a basket of six major currencies.
The sharp decline is a surprising turn for a currency typically seen as a safe haven in uncertain times.
Analysts have attributed King Dollar's slump to the "Sell America" trade, as investors dumped US assets, including stocks and Treasurys, in response to President Donald Trump's trade war.
Slower economic growth, political uncertainty, and rising fiscal concerns have contributed to the dollar's slide.
Vishnu Varathan, Mizuho's head of macro research for Asia, excluding Japan, wrote on Tuesday that the greenback is under pressure from President Donald Trump's "big beautiful bill."
The bill, which is pending a vote in the Senate, is stoking concerns about an additional $3.3 trillion to the US's deficits over a decade, according to a new estimate from the nonpartisan Congressional Budget Office.
"An unsustainable debt path is a key motivator of the 'Sell America' narrative that has compromised USD and USD assets," wrote Varathan.
Meanwhile, pull factors in other parts of the world are enticing investors, according to Sami Pepin, a fixed-income strategist at Lombard Odier, a Swiss private bank. They include defense and government spending plans in the euro zone and better stock performances elsewhere.
"Combined with broad-based concerns about global investors' high exposure to US assets, the result is strong negative USD sentiment, with limited respite," he wrote.
Despite the dollar's weakness, US stock markets have recently hit record highs. Treasurys have also made some recovery since their selloff in recent months.
The conflict is not irreconcilable, as investors appear to be hedging, not selling, the US market, according to Varathan.
"A naked 'Sell America' position can be a costly endeavour," he wrote.
