(BFM Stock Exchange) – The greenback drops clearly in the face of other currencies since the start of the year, and the decline has increased in the wake of the announcement by Donald Trump of customs surcharges. Deutsche Bank invites you to pay attention to a potential “crisis of confidence” on the greenback, whose status of refuge value vacillates.

The “Dollar King” loses his greatness. Long sovereign in the face of other currencies on the market, the greenback suffers now. This Wednesday, the American motto dives more than 0.6% against the euro around 11:30 am, a French time, a significant fall on the foreign exchange market.

Throughout the year, the dollar now abandons 6% against the euro, and the Doxy dollar index, which measures the performance of the American currency against a basket of large currencies, lost 5.6%. As we have written in a previous article, several factors explain this withdrawal from the American currency. The greenback has notably been penalized by disappointing American economic indicators and by the flight of investors to non-American assets (such as European actions) to the detriment of American titles.

In March, Barclays also noted that Donald Trump’s “erratic policy” on customs duties had abolished the dollar.

On this last point, the American customs duties applied to all imports (20% for the European Union, 104% for China) increased the pressure of a notch on the greenback.

In the wake of the announcement of this measure, the dollar plunged 1.8% against the euro, an impressive drop in the foreign exchange market, while the index ofx lost 1.7%.

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A very disappointing dollar

The American offensive caused either a response (on the part of China) or reprisal projects, especially on the European Union side. Investors panicked in front of the risk of climbing which could lead to a real trade war, and weaken global growth. Last week, JPMorgan Bank noted the probability of a recession of all the savings this year 60%.

“The drama of the trade war continues to agitate the markets, and it is probably not over,” sums up Xavier Chapard, LBPAM strategist. “If customs duties are generally close to today’s levels, we believe that this will push the American economy to the recession from the middle of the year, and will weigh significantly on the rest of the world,” he adds.

This important climate of uncertainties and trade tensions is supposed to be conducive to refuge values, as, precisely, the dollar. During the previous periods of stock market turbulence (pandemic, bursting of war in Ukraine), the American motto had been sought by investors.

However, a bit like gold, the dollar has disappointed. Part of this disappointment can be explained by fairly simple reasons. With these customs surcharge, American consumers are likely to consume less and companies invest less.

This translates, therefore, in a risk of recession from the United States, with the waterproof, the possibility that the American Federal Reserve (Fed), lowers its guiding rates. However, the more interest rates in a country are low, the more demand for the currency of this country weakens everything equal elsewhere.

Reciprocal customs duties will weaken “the American economy” and “consequently, it is more likely that the federal reserve should soften its monetary policy in a more energetic way, which will weaken essential support for money,” said UBS.

The credibility of the United States at the carpet

George Saravelos, a strategist renowned for Deutsche Bank, talks about other factors. The market expert cites in particular the fact that the secretary of the Treasury, Scott Bessent, spoke of a reduction in the American deficit shortly after the announcements on customs surcharge, when the other countries should on the contrary spend more to support their economy. This reduces the growth forecasts of the United States compared to the rest of the world, and thus weighs on the dollar.

Above all, George Saravelos believes that the way in which the United States has calculated the reciprocal customs duties applied to other countries – roughly a college level formula – “raises serious concerns about the credibility of economic policy (American)” abused by the same the dollar.

The Deutsche Bank strategist even fears “a risk of crisis of confidence” on the dollar, while the status of refuge value of the “crumbling” currency.

The German bank fears that investors will no longer have faith in the perspectives of the American economy. This could create a major upheaval: the flows of capital that have constantly deported, in the last decade, from the rest of the world to the United States (or more exactly on American assets) could leave for their countries of origin. Such a scenario would considerably weaken the dollar.

“At the end of the purposes, the United States has a major short deficit (the trade deficit to which we add net flows of service and net of financial income, editor’s note) and the stability of their currency depends on capital entries,” he explains.

No later than this Wednesday Martin, the strategist gave a layer of it. George Saravelos believes that his thesis of a crisis of confidence has been validated in recent days, and goes so far as to write that the market “is quickly”.

The dollar “The dirtiest shirt in the clothes basket”

Stephen Innes, of SPI AM, is also worried. This market expert notes that auction – to simplify an “auction” sale on the market – of a three -year -old sovereign debt did not go well on Tuesday. The coverage ratio, an indicator of the appetite of investors, fell to a six -month lower.

This event, coupled in particular with fears of “disinvestment” of foreign countries in the United States, makes that “the dollar is starting to look like the dirty shirt of the laundry basket”, underlines Stephen Innes.

In a long analysis published on Monday, the Reuters news agency also talks about “a crisis of confidence” for the dollar, adding that the status of the greenback is eroding.

“We see today that the structure and nature of the dollar vis-à-vis the world market is changing,” said Macquarie Banque Thierry Wizman agency.

To see if this “crisis of confidence” represents a lasting episode for a currency that remains – apart from market flickering – difficult to bypass.

According to data from the IMF mentioned by John Plassard de Mirabaud, the dollar still represented 57.8% of world exchange reserves at the end of 2024. “While it is true that the domination of the dollar in world reserves has decreased since the arrival of the euro and that a group of several small currencies are becoming more and more important, the domination of the greenback will continue for many years”, predicts the market expert.