By Grant Smith, Karin Strohecker and Dhara Ranasinghe
LONDON, April 2 (Reuters) – A year on from U.S. President Donald Trump’s sweeping ‘Liberation Day’ tariffs, the dollar looks in much stronger shape with its safe-haven credentials reasserted in the face of war in the Middle East.
The dollar rallied around 1.6% in the first three months of the year, its best quarterly performance since late 2024, supported by the United States’ status as an energy exporter and by investors’ flight to cash.
It’s a sharp contrast to a year ago when Trump’s tariffs sparked a dollar slide as investors reacted to heightened U.S. tariff uncertainty as well as Trump’s attacks on the Federal Reserve and his distancing from allies and global institutions.
The dollar index, which measures the value of the greenback against a basket of major world currencies, fell almost 10% last year – its worst year since 2017.
Our live dashboard tracks the dollar’s performance, taking stock of its current standing and charting where it may be headed next.
Here are some highlights:
HIGHER NOW, BUT FOR HOW LONG?
While the dollar has rebounded early in 2026, analysts say the currency still faces downward pressure over the long-term while questions about the currency’s dominance in global trade and finance linger.
FOREIGN EXCHANGE RESERVES
Central bank reserves are being watched closely for any signs of countries shifting away from the dollar.
The latest IMF COFER data for the final quarter of 2025 confirms a very gradual decline in the dollar’s share of global FX reserves.
This share has nudged lower in recent years and currencies such as the euro and yuan are seen as the main beneficiaries of the dollar’s woes.
However, the dollar is not expected to lose its position as the world’s top reserve currency any time soon, given the United States’ dominance in the global economy, trade, and debt markets. Recent shifts have been too small to make a significant dent in the dollar’s overall position.
FOREIGN INVESTMENT:
The value of U.S. assets held by foreign investors has far outweighed the assets U.S. investors hold overseas thanks to a long run-up of investment from outside that built up the strength of the U.S. currency. If that flow of investment into the U.S. were to slow, it could weigh on the dollar.
(Reporting by Grant Smith, Karin Strohecker and Dhara Ranasinghe; Editing by Elisa Martinuzzi, Ben Welsh and Toby Chopra)
