Key Takeaways:
The U.S. dollar has declined 15% since its September 2022 peak.
Julius Baer’s David A. Meier blames policy volatility and rising fiscal pressure.
Analysts say the dollar's safe-haven appeal may be weakening as the U.S. itself becomes a source of global risk.
The U.S. dollar could remain under pressure in the coming months due to growing policy instability and worsening fiscal conditions, according to David A. Meier, economist at Julius Baer Group.
“The recent depreciation trend may continue if U.S. policymakers fail to stabilize the fiscal outlook,” Meier said, noting that the dollar has already fallen about 15% since peaking in September 2022.
While the greenback has traditionally served as a global safe haven during periods of uncertainty, Meier suggests that this role could be challenged when the source of risk originates from the U.S. itself.
“It's not clear whether the dollar’s status as a safe haven is breaking down, but we often see dollar weakness during episodes when risk aversion stems from U.S. policies,” he added.
Restoring market confidence in the dollar would require a reduction in policy uncertainty and clearer long-term fiscal planning.
The commentary comes amid rising market volatility and renewed investor focus on sovereign debt sustainability in major economies.