US Dollar Outlook 2025-2026: Trump’s Policies "Ultimately Support Weaker USD"

April 9, 2025 - Written by Tim Boyer

STORY LINK US Dollar Outlook 2025-2026: Trump’s Policies "Ultimately Support Weaker USD"

Currency analysts at ING Bank note that FX markets experienced sharp reversals following President Trump’s announcement of a 90-day pause in trade tensions, disrupting recent safe-haven currency gains.

Yen and Swiss franc positions were particularly impacted by reduced immediate fears of trade escalation.

"The defensive Japanese yen and Swiss franc have been sold heavily (USD/JPY has rallied nearly 3% off its intra-day low), while those EM and commodity-linked currencies in the firing line of a global trade war have come back strongly."

Stability in US Treasury markets, particularly a successful 10-year auction, has further reduced demand for defensive currencies.

Improved bond market sentiment contributed significantly to this shift.

"Also helping the rotation away from defensive currencies has been a little stability in the US Treasury market, helped in part by a decent 10-year auction."

Despite this relief, uncertainty around US-China relations remains critical, with analysts closely watching USD/CNY for signals.


The market's attention will hinge upon developments in bilateral negotiations.

"The US and China are currently in a powerplay game of brinkmanship. Until a deal is announced or a big, bilateral meeting confirmed, USD/CNY will now be the focal attention of the FX market."

The analysts conclude that despite short-term unpredictability, Trump’s policies will ultimately support a weaker US dollar longer-term.

Market expectations align towards US Dollar exchange rate weakness into the medium term outlook.

"Ultimately we think he will get his way with a broadly weaker dollar, albeit a story for later this year and into 2026."

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TAGS: American Dollar Forecasts