Dollar supremacy cracking as investors seek escape

The dollar’s supremacy is cracking, and markets are building an escape route, warns the CEO of one of the world’s largest independent financial advisory organizations.

The warning from Nigel Green of deVere Group comes as a sell-off in the US dollar has gained momentum after President Donald Trump says he isn’t concerned by the currency’s dramatic falls in recent days, as fears in currency markets intensify over the president’s erratic policymaking.

The dollar was down 1.3% against a basket of other major currencies, leaving it trading at the lowest level in four years.

The pound and euro climbed to their strongest levels against the dollar since mid-2021. The euro advanced 1.4% to $1.204, while sterling rose 1.2% to $1.384.

The yen extended its three-day rally on Wednesday as Tokyo traders responded to Donald Trump’s overnight remarks. It strengthened to ¥152.3 per dollar.

Nigel Green comments: “Currency markets are flashing red. The dollar sits at the centre of the global financial system, and moves of this scale signal a serious loss of confidence in America’s policy direction.”

He adds: “President Trump’s dismissal of the dollar’s fall alarms investors. FX markets trade credibility and discipline. When leaders and policymakers appear unconcerned about sharp declines, traders assume volatility will persist.”

Nigel Green says the sell-off reflects a broader reassessment of US macro risk.

“Aggressive fiscal expansion, unpredictable trade policy, and sudden political interventions create uncertainty over growth, inflation, and capital flows. Currencies price risk immediately, and, as we’re seeing in real-time, the dollar is paying the price.”

Sterling and the euro rallying in tandem shows capital is searching for alternatives.

“Europe and the UK face structural challenges, but relative stability matters more than perfection. Investors always compare policy paths, and the dollar’s path looks increasingly volatile,” he says.

The yen’s jump adds another layer to the story.

“The yen remains a classic hedge in periods of policy uncertainty. Strength toward ¥152 per dollar signals global investors are hedging against policy turbulence in Washington,” the deVere CEO notes.

He warns that debt and deficits are also returning to the forefront of market concerns. “US debt issuance remains heavy, and fiscal discipline looks secondary to political messaging. FX markets punish that dynamic by demanding a higher risk premium.”

Nigel Green also highlights tariffs as a core driver of currency stress. “Tariffs raise costs, squeeze margins, and stoke inflation. When policy shifts are abrupt or poorly communicated, the currency absorbs the shock first. Investors discount the long-term drag on growth and trade.”

He says reserve managers are quietly diversifying away from the dollar. “Central banks and sovereign funds operate on trust, liquidity, and governance. Even incremental shifts out of dollar reserves can move markets when private capital mirrors the same trend.”

Institutional investors are also adjusting portfolios. “Allocations to non-dollar assets are rising. Europe, Asia, selective emerging markets, commodities, and digital assets are gaining attention as investors hedge currency risk and seek diversification.”

Nigel Green stresses the dollar’s reserve status remains intact but less unchallenged.

“Reserve currency dominance relies on trust built over decades. Trust can weaken quickly when policy signals look inconsistent. Markets are testing long-held assumptions about US assets as the default safe haven.”

He says the current episode could mark a structural turning point. “A multipolar currency world is becoming more plausible. Investors already treat the euro, yen, and select emerging market currencies as partial hedges against US policy risk. Digital assets also enter strategic discussions at the margin.”

Nigel Green concludes: “The dollar will remain central to global finance, but its supremacy has been cracking in recent years, and this has been accelerated in recent days, with markets now seemingly building an escape route.”

About

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of offices around the world, more than 80,000 clients, and $14bn under advisement.