Analysis-Dollar under fire again as investors reassess Trump policies, geopolitical risk

By Amanda Cooper, Dhara Ranasinghe and Samuel Indyk

LONDON, Jan 26 (Reuters) - The dollar is coming nether occurrence again successful the archetypal fewer turbulent weeks of 2026 arsenic a increasing scope of factors -- including Washington's tendency for a weaker dollar -- prompts a rethink of investors' optimistic assumptions for a play of stableness ​for the currency.

The dollar connected Monday was heading for its biggest three-day descent against a handbasket of large currencies since past April, erstwhile U.S. President Donald ‌Trump's "Liberation Day" tariffs unleashed an astir unprecedented selloff successful U.S. assets.

In his archetypal twelvemonth successful office, Trump's erratic attack to commercialized and planetary diplomacy, his attacks connected the Federal Reserve that undermine its independence, and immense increases successful ‌public spending pushed the dollar down 10%.

The dollar is again underperforming different large currencies including the euro, sterling and Swiss franc.

WHIRLWIND RATE OF CHANGE

"There are a fig of factors coming together," said Seema Shah, main planetary strategist astatine Principal Asset Management, which manages conscionable implicit $600 cardinal worthy of assets.

"I don't deliberation this is simply a 'Sell America' trade, but the fundamentals are coming together, and faster than expected."

Just this month, Trump has threatened to instrumentality power of Greenland, slap much tariffs connected European allies implicit the matter, moved to criminally indict Fed Chair Jerome Powell, and overseen an cognition ⁠to prehend the president of Venezuela. On Saturday, helium threatened ‌Canada with an effectual commercialized embargo.

While helium has backed down connected his threats implicit Greenland and European tariffs, and markets person shaken disconnected the onslaught connected Venezuela, the backdrop is tense.

Market measures of volatility are inactive moving blistery and enslaved marketplace sentiment is fragile, not slightest due to the fact that of ‍an assertive selloff successful Japanese authorities indebtedness that could spill implicit into Treasuries, portion gold's relentless scaling of caller records is simply a motion investors are seeking alternate safe-havens.

Trump's home policies, including an assertive crackdown connected amerciable migration that has killed 2 U.S. citizens this period and sparked protests, could punctual different authorities shutdown this month.

What's more, the Fed is inactive expected to chopped involvement rates astatine slightest doubly this ​year, portion different large cardinal banks are pausing oregon could adjacent hike rates.

This unsocial makes the dollar little appealing to investors, who could opt to enactment their wealth determination ‌where lending rates are rising.

Powell, who has resisted unit from Trump for faster complaint cuts, steps down successful May. Online betting markets present connect a 50% accidental to BlackRock’s Rick Rieder, an advocator of little rates similar the president, being the apt successor, up from little than 10% a week ago, adding to dollar weakness.