Dollar Index Plunges To 3-Year Low As Trump Tariffs-Led Trade Wars Intensify: Analyst Says 'Dollar Confidence Crisis' Now In Full Mode

The U.S. dollar index (DXY) registered its biggest fall in three years, falling below the 100 level for the first time since 2022 as trade wars between the U.S. and China intensified, taking a toll on the greenback’s status as the world’s reserve currency.

At the time of writing, DXY was hovering at 99.67, following a 1.2% decline. It plunged to 99.25, falling almost 10% from its recent high of 110.

The dollar declined against the Swiss franc, Japanese yen, euro, and Canadian dollar as traders turned bearish on U.S. assets.

“The question of a potential dollar confidence crisis has now been definitively answered – we are experiencing one in full force,” ING Bank NV analysts wrote in a note, according to a Bloomberg report.

“The dollar collapse is working as a barometer of ‘sell America’ at the moment,” the ING note added.

On Friday, some of the major banks, including JPMorgan Chase & Co. (JPM), Morgan Stanley (MS), and Wells Fargo & Co. (WFC), reported their first-quarter earnings.

While JPMorgan and Bank of New York Mellon (BNY) beat Wall Street estimates with their first-quarter performance, the management commentary will likely shape the market’s views.

JPMorgan CEO Jamie Dimon had a word of caution for the U.S. economy, warning that it is facing “considerable turbulence,” with factors like tariffs and elevated fiscal deficit weighing down on growth prospects.

The declining confidence in the greenback has also led to a surge in gold prices, with the yellow metal rising to a record high. At the time of writing, spot gold prices stood at $3,225 per ounce, gaining 1.6%.

This comes amid escalating tensions between the U.S. and China, with both countries hiking tariffs in a tit-for-tat manner over the past few days.

While the U.S. has hiked effective tariffs on Chinese goods to 145%, China has retaliated with a 125% tariff on U.S. goods.

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