I believe that the shocks currently occurring in the financial markets are merely strategic setbacks in the larger recovery journey of the US economy. And if everything goes as predicted, the USDX could very well return to its previous peak of over 110.1 (previously reached on January 13, 2025, according to data from #FXCE ) this year.
Currently, market sentiment is being influenced by short-term shocks from President Trump's new 25% tariff, causing temporary disruptions at Stellantis factories in Canada and Mexico. Layoffs are rising sharply, personal spending is declining, bond yields are plummeting – all creating a seemingly negative economic picture. But beneath that fog, a clear strategy for domestic economic recovery is taking shape.
President Trump did not randomly choose to 'hurt' the market at this time. The imposition of large-scale tariffs is a lever forcing the Fed to lower interest rates in the second half of 2025. As interest rates decline, borrowing costs will also decrease, allowing American businesses to expand investments and redistribute production domestically – a direction that has long been part of the 'America First' initiative.
Why do I believe the USDX will rise again?
Global capital will flow back to the US: As other economies are also affected by tariffs, the US, with its domestic manufacturing advantage and large consumer market, will become an attractive destination for investment flows.
The Fed will ease at the right time: Not too early, but just enough to stimulate demand before the real recession occurs. This will create a perfect 'soft landing' for the USD.
The US remains a safe haven: In the context of global instability, the US dollar is always where investors turn to. When confidence returns, the greenback will continue to affirm its dominant position.
Even when the stock market has yet to find a balance, #USDX is retreating a step, from the 103.3 range down to 101.3 after the tariff news (data from FXCE), which is also a zone of accumulation before a major growth surge.
We have seen the USDX break 110 earlier this year — and it would not be surprising if the US dollar breaks that mark again by the end of 2025, when the domestic economy recovers, production ramps up, and interest rates are gradually adjusted more flexibly.
In summary: The current difficulties are necessary for the US to create a stronger, more independent economic structure. And in this journey, the US dollar – as the 'lifeblood' of the global economy – will undoubtedly return stronger than ever. For long-term traders like me, this is the time to observe, accumulate, and prepare for the next growth phase.