The US dollar is currently spiraling out of control, as fiscal pressure, coupled with Trump’s tariff ordeal, continues to batter its building momentum. USD has lost significantly this year, shedding nearly 16% of its value in the first half of 2025. The USD is now up in arms, fighting major currency competitors on the rise, all while managing to keep its allure intact around the world. However, with the recent analysis at hand, it seems that USD may take a while to regain its glory, as experts warn that the bearish USD sentiment may persist for years to come.
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Experts See USD Weakness Extending Beyond 2025
A recent Bloomberg article on the USD’s value depreciation has delivered a stark warning to USD investors. The US dollar is currently on a path to shed more of its value, as it embraces a constant bearish sentiment. Per expert Marco Papic of BCA Research, the US dollar has entered a bear market that may last up to 3 to 5 years:
“In my view, the US dollar is in a secular bear market that may last three to five years. My proxy is the move we saw in the US Dollar Index from 2002 to 2007, a period during which the greenback fell all the way down to 80.”
Lauren Goodwin of New York Life Investments believes the US dollar may encounter a sharp decline in the second half of 2025:
“We see structural factors pulling the dollar lower, though we expect a more gradual, volatile depreciation in the second half of the year compared with the first.”
In addition to this, Andrea DiCenso of Loomis Sayles and Co. shared how USD cycles tend to last 6 to 9 years. With the dollar spending a decade in a bull market, investors should expect bearish hues to hound the USD more aggressively now.
“Dollar cycles tend to last seven to nine years, and we’ve been over a decade in a bull market… In the second quarter you saw about a 7% decline in the DXY. And while we’ve seen a little bit of a reprieve lately, we think that’s temporary. We can see the DXY, now trading around 98, reaching about 94, which would be another 5% to 6% decline.”
Factors Impacting the Dollar
Several experts shared how wobbly US fiscal policies, uncertainty, and Trump’s tariffs are major drivers headlining the US dollar decay and erosion.
“There are a few reasons for this change. First, a growing fiscal deficit has gradually reduced confidence in the US as a safe haven. And while tariff-driven trade disruptions and reduced import flows may be shrinking the US trade deficit. They reduce capital flows and global demand for US assets, contributing to dollar weakness. As well, policy uncertainty has global central banks adjusting their reserve balances away from US dollars. On the margin. Toward gold. That’s why we can see dollar depreciation. Even as demand for US assets has been stable or even higher in the near term.” Goodwin later shared
Moreover, experts have also shared how slow US trade growth, policy, and economic data could further weaken the American currency:
“Our bearish dollar view of the last 12 months remains intact, but the driving forces have evolved with the evolution of US policy and economic data. We believe the primary drivers of US dollar weakness will be. A large overhang of unhedged US dollar assets owned by global institutions and individuals. The starting valuations of the dollar. Tariffs and slower growth of global trade along with bilateral trade in non-US dollars. Looser fiscal and monetary policy in the US. A greater requirement to deploy savings locally in an economically fragmenting, multipolar world.”
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