The Dollar's Drop Is a Warning Shot

The U.S. dollar used to have one of the most valuable traits a currency can possess: it was boring. Not boring as in irrelevant. Boring as in dependable. For decades, the greenback didn't just dominate because America was powerful, but because the country was legible. But confidence in the currency is starting to show cracks.

The greenback has been sliding hard. It dropped to levels not seen since early 2022, and the euro surged above $1.20, reaching its strongest level against the dollar since 2021. The Swiss franc climbed to its strongest point versus the dollar in more than a decade. This isn't just a technical story about interest-rate expectations or positioning. It's a political story about confidence, and confidence is the one asset the U.S. can't manufacture at scale.

On paper, the United States is not in crisis. Stocks are near record highs. The S&P 500 has rebounded to touch a record, brushing up against that psychologically irresistible 7,000 level. Tech stocks are leading again. Nvidia climbed in premarket trading. Intel jumped 5.5%. Micron and Microchip Technology gained over 4%. Texas Instruments surged 8% after forecasting first-quarter revenue and profit above estimates, pointing to data centers and an industrial recovery. ASML, the chip-machine giant, booked its highest-ever fourth-quarter orders and expects healthy sales growth this year. 

And there's more: China has started approving purchases of Nvidia's H200 AI chip, a development that suggests the AI boom still has legs, despite all the questions about whether the spending is sustainable.

So why is the dollar behaving like this? The answer lies partly with the White House. From threatening tariffs to designs on Greenland, Donald Trump's actions have rattled markets enough that investors are reducing exposure to U.S. assets. The dollar's selloff gathered force after a sharp Tuesday drop that marked its biggest daily fall since April. And it wasn't happening in a vacuum. Even before Trump's latest comments, analysts pointed to government-shutdown fears and weak consumer confidence as drivers of dollar weakness. Add to that the broader concerns already weighing on the currency -  questions about Federal Reserve independence, tariff uncertainty, and the U.S. fiscal trajectory - and you get the kind of cocktail that makes investors reach for exits.

To top it all, Trump appeared to encourage the dollar's weakening in comments to the press in Iowa, which accelerated the move. He said the dollar is "in great shape." Investors didn't take it as reassurance. They took it as a signal that Washington is comfortable with what's happening.

The Trump administration has long viewed the dollar as overvalued, or- more precisely - as a victim of foreign currencies kept artificially weak by state-led manipulation aimed at boosting export competitiveness. In that worldview, a weaker dollar isn't a bug: it's a correction. And yes, a weaker dollar can help U.S. multinationals. It makes exports more competitive. It makes overseas profits look better. It can flatter the earnings of the very companies now holding up the market.

But it comes with a cost: it shows up in the price of imported goods. A weaker dollar makes imports more expensive, which fuels inflation. And this is happening at the most sensitive possible moment: the Federal Reserve is meeting today.

The Fed is widely expected to keep interest rates unchanged at 3.5%–3.75%. In a normal year, that would be the end of the story. Investors would wait for a few adjectives in the statement, parse Jerome Powell's tone, and go back to obsessing over earnings. But this is not a normal year. The central bank is navigating policy through erratic politics, doubts about the reliability of the economic data and expectations of the announcement of a new Fed chair imminently.

The question isn't whether Powell will hold rates steady today. The question is whether the Fed can still convince the world it is steering with two hands, not being tugged by the sleeve.

Today's economic highlights:

Today: Australia's annual and monthly inflation rates along with the RBA Trimmed Mean CPI will be released; in Germany, the GfK Consumer Confidence index will be unveiled; in Italy, consumer and business confidence indices will be announced; in the United States, the MBA 30-Year Mortgage Rate, EIA Gasoline and Crude Oil Stocks Changes, the Fed Interest Rate Decision, and the Fed Press Conference are on the agenda; in Canada, the BoC Interest Rate Decision, BoC Monetary Policy Report, and BoC Press Conference are expected. See the full calendar here.

• Dollar index: 96,118
• Gold: $5,275
• Crude Oil (BRENT): $66.77 (WTI) $62.11
• United States 10 years: 4.24%
• BITCOIN: $89,391

In corporate news:

• Amazon is cutting 16,000 jobs globally, citing pandemic-era overhiring and increased use of AI, marking its second major layoff round in three months.
• Apple is expected to post its strongest iPhone sales growth in over four years, driven by demand for Pro models and its AI partnership with Google.
• Walmart has promoted 3,000 pharmacy technicians to higher-paying team lead roles averaging $28 per hour.
• ByteDance, Alibaba, and Tencent received approval from China to import Nvidia's H200 AI chips, signaling a shift in Beijing's stance amid domestic chip development efforts.
• Delta Air Lines ordered 31 new widebody jets from Airbus to expand its long-haul fleet, with deliveries starting in 2029.
• Devyser signed a strategic deal with Illumina to provide sequencing instruments and related products, aimed at simplifying lab operations.
• Boeing forecasts that India and South Asia will need 3,290 new planes over the next 20 years due to strong passenger growth and rising demand.
• MedPal AI's unit has been approved to purchase Eli Lilly products, including Mounjaro, for distribution in the U.K.
• Ignis is considering an IPO and has hired Citigroup to explore listing options, with a potential valuation of over €1 billion.
• SoftBank is in talks to invest up to $30 billion more in OpenAI, as part of a funding round that could value the firm at $830 billion.
• Indonesian stocks plunged after MSCI flagged transparency concerns, placing the country at risk of being downgraded to frontier-market status.
• Hong Kong home prices rose 3.3% in 2025, marking the first annual gain since 2021 amid falling interest rates and housing supply constraints.
• Texas Instruments rises 8% in after-hours trading following its quarterly results.
• UPS will cut up to 30,000 jobs and close sites.
• China approves the first shipment of Nvidia's H200 AI chips for import, according to Reuters.
• Google announces the launch of AI Plus in 35 new countries and territories, including the US.
• C3.AI in talks to merge with startup Automation Anywhere, according to The Information.
• SpaceX seeks to raise up to $50 billion based on a valuation of approximately $1.5 trillion in an IPO in June, according to the FT.

Analyst Recommendations:

• Applied Materials, Inc.: Mizuho Securities upgrades to outperform from neutral with a price target raised from USD 275 to USD 370.
• Circle Internet Group, Inc.: Mizuho Securities upgrades to neutral from underperform with a price target raised from USD 70 to USD 77.
• Kkr & Co. Inc.: HSBC upgrades to buy from hold and raises the target price from USD 139 to USD 144.
• Microchip Technology, Inc.: Zacks upgrades to outperform from neutral with a price target raised from USD 78 to USD 86.
• Nextpower Inc.: KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 142.
• Occidental Petroleum Corporation: Zacks downgrades to underperform from neutral and reduces the target price from USD 44 to USD 38.
• Paypal Holdings, Inc.: Rothschild & Co Redburn downgrades to sell from neutral and reduces the target price from USD 70 to USD 50.
• Qorvo, Inc.: Stifel downgrades to hold from neutral and reduces the target price from USD 88 to USD 85.
• Roper Technologies, Inc.: Stifel downgrades to hold from buy and reduces the target price from USD 550 to USD 385.
• Western Alliance Bancorporation: JP Morgan downgrades to neutral from overweight and raises the target price from USD 100 to USD 105.
• Albemarle Corporation: JP Morgan maintains its neutral recommendation and raises the target price from USD 80 to USD 195.
• Commvault Systems, Inc.: Cantor Fitzgerald maintains its neutral recommendation and reduces the target price from USD 144 to USD 100.
• General Motors Company: Daiwa Securities maintains its neutral recommendation and raises the target price from USD 65 to USD 82.
• Hubspot, Inc.: UBS maintains its buy recommendation and reduces the target price from USD 600 to USD 450.
• Kratos Defense & Security Solutions, Inc.: KeyBanc Capital Markets maintains its overweight recommendation and raises the target price from USD 90 to USD 130.
• Lam Research Corporation: Mizuho Securities maintains its outperform rating and raises the target price from USD 220 to USD 265.
• Mks Inc.: Mizuho Securities maintains its outperform rating and raises the target price from USD 215 to USD 260.
• Seagate Technology Holdings Plc: Cantor Fitzgerald maintains its overweight recommendation and raises the target price from USD 400 to USD 500.
• Slb N.v.: Griffin Securities maintains its neutral recommendation and raises the target price from USD 42 to USD 54.
• Teradyne, Inc.: Morgan Stanley maintains its equalwt recommendation and raises the target price from USD 174 to USD 229.
• Texas Instruments Incorporated: Bernstein maintains its market perform recommendation and raises the target price from USD 160 to USD 205.
• United Parcel Service, Inc.: Deutsche Bank maintains its hold recommendation and raises the target price from USD 88 to USD 106.
• Viatris Inc.: Piper Sandler & Co maintains its neutral recommendation and raises the target price from USD 9 to USD 12.