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A sell-off in the US dollar accelerated on Tuesday afternoon after Donald Trump said he was not concerned by steep falls in recent days, as concerns in currency markets intensify over the president’s erratic policymaking.
The greenback was down 1.3 per cent against a basket of other major currencies, leaving it trading at the lowest level in four years and off 2.6 per cent since the start of 2026.
The UK pound and euro lurched to the highest levels since mid-2021 against the dollar. The common currency rallied 1.4 per cent to $1.204, while sterling jumped 1.2 per cent to $1.384.
The fresh jolt of currency market turbulence came after Trump was asked at an event in Iowa whether he was worried about the currency’s recent fall, and responded: “No, I think it’s great.”
He added: “Look at the value of the dollar. Look at the business we are doing. The dollar is, the dollar is doing great.”
A shift into haven assets also accelerated on Tuesday. Silver prices surged more than 8 per cent to $112 per ounce, while gold rose 3.5 per cent to $5,185 per troy ounce.
“Gold strength and dollar weakness reflect serious doubts over chaotic, off-the-cuff policymaking by Trump,” said Trevor Greetham, head of multi-asset investing at Royal London Asset Management, citing the administration’s latest broadsides against Canada and South Korea.
“Credible hints that the US may intervene to buy the yen shows policymakers just don’t care about the downside risks to the dollar,” Greetham added, a reference to speculation in recent days that the US and Japan would jointly intervene in currency markets to stop the rapid depreciation of the yen against the greenback.
The New York Federal Reserve performed a “rate check” on the yen late on Friday at the request of the Treasury department, a move that is often seen as a precursor to an intervention.
Analysts at MUFG added that the euro was “benefiting from its role as the anti-dollar”, as worries swirl over US policymaking.
“Erratic US policy means that while risk assets are doing well, the dollar could be hit. The ‘sell America’ trade is a persistent theme . . . International investors are not convinced the decline in the dollar is over,” said Thomas Simons, chief US economist at Jefferies.
A number of issues are weighing on the US currency simultaneously, analysts said.
Among the worries is the risk that parts of the federal government shut down as soon as Saturday. Democratic senators have threatened to withhold support for a funding package that includes money for the Department of Homeland Security unless significant reforms are made to immigration enforcement.
Investors have also homed in on uncertainty over who Trump will nominate to replace Jay Powell as Fed chair when his term expires in May, as well as tensions between the US and its Nato allies — which came to a head last week over Trump’s demands to take over Greenland.
“Greenland reignited the dollar’s risk premium,” said Lefteris Farmakis, senior FX strategist at Barclays. “The upending of the post World War II order is a long-term negative for the dollar,” he said, as it encourages investors to move out of dollar-denominated assets or to hedge their dollar exposure.
Many investors expect the dollar to weaken further in 2026, with analysts at JPMorgan saying on Tuesday that “reasons to be bearish on the dollar remain intact”.
Meanwhile, economic and political developments across the Atlantic have allowed investors to turn more positive on the euro and sterling.
Recent economic data from Germany, the Eurozone’s biggest economy, has buoyed sentiment among some investors, said Constantin Bolz, head of G10 FX strategy at UBS Global Wealth Management.
Germany’s economy grew 0.2 per cent in 2025 — its first positive reading since 2022 — while a closely watched measure of activity in the construction sector rose in January to its highest since 2022.
“Europe hasn’t grown for the last 15 years. If this fiscal spending really lifts growth, that should be supportive [for the euro],” Bolz said.