The White House says it wants a strong US dollar. Investors are still keeping their distance.

Core Viewpoint - The US dollar experienced its largest annual decline in eight years in 2025, with a 9% drop, and remains down about 1% from the start of the year despite a recent rally [1][2]. Group 1: Dollar's Performance and Market Sentiment - The dollar index has not recovered from the significant losses incurred after President Trump's tariff announcements, which caused a more than 5% drop in the dollar [2]. - Investors are skeptical about the US administration's commitment to a "strong dollar," as policy uncertainty continues to affect market confidence [1][2]. Group 2: Reserve Currency Status - The US dollar has long been regarded as the world's reserve currency, providing the US with an "exorbitant privilege" and serving as a safe haven during market instability [3]. - There are concerns that the dollar's reserve status may be threatened due to the US's changing role in global security and order, leading to potential reallocations away from the dollar [4]. Group 3: Monetary Policy Implications - The nomination of Kevin Warsh as Fed Chair has raised expectations of aggressive rate cuts, which briefly supported the dollar but ultimately contributed to ongoing uncertainty [5][6]. - President Trump's comments indicate a strong likelihood of rate cuts under Warsh's leadership, further complicating the dollar's outlook [6]. Group 4: Alternative Hedging Strategies - As geopolitical risks and policy uncertainties rise, traders are increasingly seeking alternative hedges, such as the euro, Swiss franc, and gold, indicating a shift in market sentiment away from the dollar [7].