(BFM Stock Exchange) – Welded by the uncertainties caused by the Trump administration policy, the American currency drops 9% against the euro since the start of the year, and more broadly 8.9% against major currencies. Several financial intermediaries see the euro continue to manhandle the American currency and go widely over $ 1.20.

The “Dollar King” is nothing more than the shadow of himself. A few months ago, the American currency was perceived as a refuge value, and many strategists expected it continued to progress. Some of them even saw the euro falling under parity, that is to say under 1 euro for 1 dollar.

None of this has happened. Since the start of the year, the dollar has plunged 9.1% against the euro, which is currently $ 1.14. More broadly, the Doxy Doxy index, which measures the performance of the greenback against a panel of large currencies, sells 8.5% over the whole of 2025.

This dollar disgrace is linked to many reasons, but all are directly or indirectly linked to the Trump administration policy. The growth prospects of the United States have deteriorated. The OECD lowered, Monday, its prediction for the increase in American GDP to 1.6% for 2025, against 2.2% previously, and 2.8% in 2024.

Unsurprisingly, this lowering is linked to the impact of customs duties announced by the Trump administration since the start of the year. “If new customs duties can further encourage the United States, the increase in import prices will reduce real consumer income and increase the price of imported intermediate goods,” said the OECD. “Customs prices and political uncertainty disrupt value chains and negatively affect investments,” she adds.

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The market has diverted American active

The main cause of the dollar fall is not as much economical as it is purely financial. Donald Trump’s procrastination on his trade policy and his desire to use customs duties as a diplomatic weapon did not shine that his business partners. Investors have operated on a large switch, turning away from American assets (stocks, bonds, dollar) to move their funds to other countries, in particular Europe.

This “portfolio rotation”, as it is called in the stock market jargon, returns to sell titles in dollars to buy them in currencies other than the greenback. This inevitably exerts a downward pressure on the American currency.

“In the past few weeks, the dominant theme of the market has been reviewed by global investors from their important exhibitions to the dollar,” wrote in mid-May Bank of America. The establishment then evoked a “collective thought” change of foreign investors on their exhibitions to American assets and American currency.

“While the market is increasingly identifying political risks (and implementing policies) emanating from the United States, as well as a broader tendency to insulation in matters of economic and foreign policy, many long-established principles are increasingly questioned,” she said.

Not touch to Powell

A simple market paradox attests to the distrust of investors. Since the announcement of reciprocal customs duties in early April, US bond rates have climbed. The performance of the US debt title to 10 years increased from 4% to more than 4.6% in May (and 4.5% currently). At the same time, the dollar fell by more than 5%. Normally, an increase in the bond rates of a country is accompanied by an increase in the motto of the same country because it becomes more interesting to place your money there.

This contradiction with traditional market mechanisms is therefore due to the flight of investors. The increase in bond yields has only encouraged them to sell their American assets more, and therefore to further pressurize the dollar.

Deutsche Bank feared in April “a crisis of confidence” on the American motto. On Monday, in its economic and market forecasts for the second half, the German bank said that, regardless of future decisions of the Trump administration “the evil is done” on the dollar. “Only the future will tell us to what extent the dollar has been damaged,” she insists.

UBS, for his part, stresses that the threats of Donald Trump against the president of the American Federal Reserve (Fed), Jerome Powell, only worsened things.

“Although it is unlikely that Jerome Powell be removed from his duties before the end of his mandate, in May 2026, the simple fact of discussing the independence of the Fed added a new layer of uncertainty. This situation, combined with persistent trade tensions, increased extreme risks for investors and accentuated the pressure on the dollar,” she said.

An American budget project that goes wrong

For the rest, strategists still see the dollar unscrew, especially against the euro. Goldman Sachs warns that Donald Trump’s budgetary bill, his famous “Big, Beautiful, Bill” (“Grand, Beau, Bill”) will result in “budgetary deficits for an extended period, which goes hand in hand with the persistence of the deficits of the current balance”.

However, the balance of current transactions reflects, roughly speaking, the difference between incoming and outgoing financial flows in a country. A deficit of the American current balance therefore leads the dollar.

In a note published on Monday, Morgan Stanley sees the weakness of the greenback persist against the euro, the yen, and the Swiss franc, and to a lesser extent in front of the British book. The Bank points to the fact that the Fed is reluctant to lower its rates to support activity unless a drop in inflation really finds.

“At the same time the volatility and persistent uncertainty of American trade policy, as well as the vague prospects of the next American budget project encourage investors to cover the exchange risk of their existing American assets, which weighs on the dollar,” writes Morgan Stanley.

The American bank also explains that the future US law to reduce immigration will lead to the growth of the United States. Consequently, Morgan Stanley estimates that all these reasons will propel the euro beyond $ 1.20. Bloomberg reports that the bank Table even on a figure of $ 1.25 for next year, therefore against 1.14 currently.

Morgan Stanley is far from being an isolated case. The Japanese Bank Nomura also provides an increase in the euro. “We now see Eurodollar reaching 1.20 by the end of the year, the euro being a major beneficiary of the change of feeling (market, editor’s note) with regard to the dollar,” she wrote on May 30.

Deutsche Bank is roughly on the same line as Morgan Stanley. The German establishment tables one euro at $ 1.20 at the end of December 2025, 1.22 at the end of June 2026 and 1.25 in December 2026.

The German bank explains that the dollar will suffer from the digging of American deficits (budgetary, current accounts) and the drop in international investments. “Outside the United States, evolution towards a more expansive budgetary policy worldwide should support growth without the constraints of financing the United States is confronted,” said Deutsche Bank.

Any increase in the dollar will be ephemeral

Bank of America also has a pessimistic bias on the dollar. “Despite the temporary customs suspended customs officer granted to China, the cyclical opposite winds are topical (…) even with the new customs tariffs, the growth prospects of the United States-a pillar of the dollar appreciation over the years-will always be affected,” she wrote mid-May.

The American bank also notes that the structural decline in investor exposure to the dollar and American assets is probably “in the beginning”. Bank of America estimates that Eurodollar will register at $ 1.17 at the end of 2025.

UBS is also more measured. But the Swiss bank still sees the dollar drop and therefore the euro climb. She tried to a Eurodollar at 1.16 in December then 1.20 dollars in June 2026.

“A greater budgetary discipline in the United States is necessary, while commercial policies are likely to cause an slowdown in American growth, which the Fed should balance by a more flexible monetary policy,” said the Swiss bank.

“Meanwhile, Europe is moving towards budgetary expansion, in particular with Germany which lifts its brake on debt and increases its defense expenses, thus supporting growth in the euro zone greater than 1%. When European growth stabilizes, monetary relaxation (on the part of the European Central Bank, editor’s note) will end,” she adds.

Clearly, not many people see the dollar going up the slope. “We expect any increase in the short -term dollar to be considered as an opportunity for sale, unless major political and economic changes,” even warned Bank of America on Thursday.