The US dollar is struggling to stay afloat. According to analysts, the greenback has shown its worst performance since the start of the 20th century. Experts expect even worse weakness. The main reason is US President Donald Trump’s tariff policy, which has forced investors to reconsider the US dollar’s status as a safe-haven asset. Although fears of a global trade war are ebbing away, analysts at Bank of America (BofA) warn of a high risk of stagflation. Moreover, the negative impact of tariffs is far from over. Experts view the capital outflow from the dollar as a troubling signal.

“One of the key market themes in recent weeks has been global investors reevaluating their large US dollar positions. This trend is just beginning, but it’s a worrying sign,” BofA notes. The bank’s currency strategists maintain a bearish outlook on the dollar. “The headwinds for US economic growth remain the same, and traders are poised to reallocate real-money dollar positions,” analysts add.

Experts estimate that since the beginning of 2025, the sell-off of the greenback has surpassed all previous years dating back to 1999. “The US dollar is on track for one of its worst starts since 1973. Meanwhile, the real effective exchange rate of the dollar remains overvalued by 22%,” BofA stated.

Consensus is also shifting. According to a recent BofA survey, short positions on the greenback dominate both the currency and interest rate markets. Although the dollar saw a slight recovery after its recent drop, analysts warn of a high likelihood of further declines.

Earlier, BofA specialists noted that due to tariffs, stagflationary risks in the US remain the key catalyst, reinforcing their bearish view on the greenback. Any optimism from trade deals may prove short-lived. The dollar’s status as a safe-haven asset is now in question, although it still leads the market, offering some hope for a rebound. However, global investors are reevaluating their portfolios, and many are going short on the US dollar.