Future of US Dollar in Doubt as Safe-Haven Status Unravels

The US dollar future faces unprecedented challenges right now, and many investors are actually wondering why is the dollar falling today. The greenback has dropped about 15% since September 2022, and experts are warning that this decline might signal a bigger structural change in how the world’s monetary system works. Current market conditions suggest the US dollar future may be entering what analysts describe as a “longer-term bear market” that’s being driven by erratic policymaking and also accelerating de-dollarization efforts worldwide.

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Also Read: China’s BRICS Play: Fuels De-dollarization & Russian Oil to Defy US## JPMorgan Outlook, Falling Dollar, And De-Dollarization Risk For More Countries

Source: PYMNTS.comSource: PYMNTS.com### Policy Shock Undermines Dollar Confidence

The US dollar future turned sharply negative following Trump’s “Liberation Day” tariff announcement on April 2nd, which actually triggered an immediate 10% currency decline. This policy shock broke the dollar’s traditional correlation with US interest rates, and it’s signaling some deeper structural problems that weren’t there before.

Christian Gattiker and David Meier stated:

“Bearish US dollar sentiment has been spreading in markets, with investors questioning the US dollar’s safe-haven character.”

**“Bearish US dollar sentiment has been spreading in markets, with investors questioning the US dollar’s safe-haven character.”**The erratic nature of current policymaking continues undermining confidence in US assets, along with the recently passed “One Big Beautiful Bill Act” that’s cementing unsustainable fiscal deficits. These deficits are putting pressure on the Federal Reserve to lower rates, which further weakens the US dollar future outlook.

JPMorgan Identifies Structural De-Dollarization

JPMorgan’s research is also revealing some concerning trends that are threatening the US dollar future across multiple sectors. While the dollar still maintains 88% of foreign exchange volumes, central bank reserves have actually fallen to two-decade lows right now.

Luis Oganes had this to say:

“The concept of de-dollarization relates to changes in the structural demand for the dollar that would relate to its status as a reserve currency. This encompasses areas that relate to the longer-term use of the dollar, such as transactional dominance in FX volumes or commodities trade, denomination of liabilities and share in central bank FX reserves.”

“The concept of de-dollarization relates to changes in the structural demand for the dollar that would relate to its status as a reserve currency. This encompasses areas that relate to the longer-term use of the dollar, such as transactional dominance in FX volumes or commodities trade, denomination of liabilities and share in central bank FX reserves.”### Medium-Term US Dollar Forecast Remains Negative

The US dollar future through 2026 looks increasingly bleak as multiple factors are converging. The US “twin deficit” structure creates natural downward pressure when investment inflows fail to compensate for structural outflows, and this is happening more frequently now.

Alexander Wise stated:

“For US equities, outright and relative returns would be negatively impacted by divestment or reallocation away from US markets and a severe loss in confidence. There would also likely be upward pressure on real yields due to the partial divestment of US fixed income by investors, or the diversification or reduction of international reserve allocations.”

**“For US equities, outright and relative returns would be negatively impacted by divestment or reallocation away from US markets and a severe loss in confidence. There would also likely be upward pressure on real yields due to the partial divestment of US fixed income by investors, or the diversification or reduction of international reserve allocations.”**Also Read: USD Down 9%, Yuan Down Just 1.6%: De-Dollarization Gaining?

**Also Read: USD Down 9%, Yuan Down Just 1.6%: De-Dollarization Gaining?**De-dollarization is most visible in commodity markets, where energy contracts are increasingly using non-dollar denominations. This directly challenges the petrodollar system that has been supporting the US dollar forecast for decades.