Trump’s Embrace of Weaker Dollar Fuels Bets on New Downtrend

President Donald Trump’s relaxed tone about the is fueling speculation the US currency is at the start of a longer-term decline.

The dollar suffered its deepest one-day drop since last year’s tariff rollout after Trump said on Tuesday he didn’t think the currency had . Bloomberg’s slid as much as 1.2% as the comments sapped the appeal of the greenback and US Treasuries — boosting what has become known as the debasement trade.

For Stephen Jen , founder of Eurizon SLJ Capital, this marks the start of a new phase of dollar declines as the Trump administration targets an exchange rate that supports US exporters.

“This may very well be the beginning of the next leg lower in the dollar, and many may not be prepared for it,” said Jen, a former Morgan Stanley currency strategist who developed the “ ” theory. “There has been a generation of currency analysts accustomed to dealing with a strong dollar and a strong US economy, and unable to process the scenario of a weakening dollar and a strong US economy.”

The dollar’s recent decline is great for US businesses, Trump told reporters in Iowa. While that’s in line with previous commentary from US officials, his remarks moved currency markets late Tuesday, partly because they appeared to validate the steep decline in the greenback in recent sessions.

Bloomberg’s dollar index sank to the lowest level in almost four years in New York trade, before trimming some of its declines in Asia Thursday. The dollar’s slump helped push both the euro and pound to the strongest levels since 2021, while the Swiss franc reached the highest since 2015.

In Asia, the Malaysian ringgit and Taiwan dollar led gains against the US currency in early Asian trade.

“When the person who could jawbone to defend the currency sounds unconcerned, the perceived backstop under the dollar gets thinner,” said Anthony Doyle , chief investment strategist at Pinnacle Investment Management.

“Markets are reopening the question of whether the US is asking investors to accept a lower standard of stability, and therefore demanding a higher price for bearing US risk,” he said.