Overview
- The dollar is trading near €1.20 after a sharp slide since President Trump returned to office, with the administration treating the depreciation as a competitiveness tool.
- Trump has selected Kevin Warsh to lead the Federal Reserve, with confirmation expected after Jerome Powell’s term ends in May, and Warsh has argued for prioritizing domestic growth over traditional anti‑inflation orthodoxy.
- U.S. officials have engaged Japan and South Korea on currency issues, with analysts describing informal coordination rather than a formal Plaza‑style agreement.
- A weaker dollar may support U.S. reindustrialization and exports but could stoke imported inflation and erode the safety premium on Treasury bonds, raising financing costs.
- Europe faces pressure from a stronger euro and limited policy levers, while some estimates put foreign holdings of U.S. assets near $27 trillion, including roughly $8 trillion by European investors.