Trump Tariffs and European Growth Push Dollar to Worst Decline Since 2002
The US dollar is on track for its biggest two-month decline since 2002, falling 7.7% during March and April 2025.
Two key factors drove this decline: Germany’s decision to end decades of austerity with increased public spending (boosting euro area growth expectations), and President Trump’s tariff announcements triggering a flight to safe-haven currencies like the yen, Swiss franc, and euro.
Despite edging up 0.25% on Tuesday following reports that the Trump administration might soften planned tariffs, the dollar remains under pressure. Deutsche Bank notes that foreign investors are staging a “buyers’ strike” on US assets despite recovering prices. The euro, though down 0.38% on Tuesday at $1.1379, is still on course for its largest monthly gain against the dollar in over two years.
Analysts suggest the euro-dollar could reach 1.20-1.25, while the yen may strengthen further if global economic slowdown forces major central banks to implement deeper rate cuts.
