The Unstoppable Dollar Meets the Immovable Mr Trump

New research outlines why the world is nearing the end of a 14-year US dollar upcycle—and what comes next.

Ninety One’s Investment Institute has today released the whitepaper, The Unstoppable Dollar Meets the Immovable Mr Trump, offering a historically grounded forecast for global currency markets. The report argues that the structural forces that have propelled the US dollar’s dominance since 2011 are now aligning for a decisive reversal—one that could shape asset allocation, capital flows, and geopolitical relationships for years to come.

Full dollar cycles—lasting around 18 years—are rare, deeply entrenched, and only reverse when multiple macroeconomic and policy levers shift simultaneously. With a second Trump presidency now in play, all four of these levers—fiscal and current account deficits, interest rate differentials, global investment flows, and geopolitical alignment—are flashing red.

“The Trump shock, if it materialises, will not just be political. It could be the macro catalyst that ends the dollar’s remarkable run,” said Sahil Mahtani, Head of Macro Research, Ninety One. “History shows dollar inertia breaks only when every structural force turns at once. That time may be now.”

Challenging the Age of US Exceptionalism

Since the global financial crisis, allocating to US assets has been a ‘default trade’—backed by deep capital markets, tech sector dominance, and institutional credibility. This era of “unquestioned American overweight” may now be ending. The combination of rising fiscal strain, tariff-driven distortions to global trade, and a transactional foreign policy has created vulnerabilities where once there was consensus.

“The dollar has defied gravity for over a decade,” Mahtani notes, “but we are entering a period where geopolitical tailwinds are reversing and global allocators are looking elsewhere—not because the US is collapsing, but because opportunities abroad are rising while risks at home are mounting.”

A Historical Framework for Currency Turning Points

Drawing on over five decades of currency data to chart how the US dollar has cycled through three previous upswings and downswings since 1970, these transitions—marked by events like the Nixon Shock, the Plaza Accord, and the post-dotcom global rebalancing—occurred only when four conditions were met:

1. Deteriorating US fundamentals (e.g., widening deficits),
2. Rising growth and yield abroad,
3. Reallocation of global capital, and
4. Some form of currency policy inflection, whether market-led or coordinated.

In each case, a decisive shift occurred within a narrow two- to three-year window. In fact, 2025 may be another such window, driven by macro and political developments that are already unfolding.

Trump as the Inertia Breaker

Trump’s second term could be the “immovable object” that finally collides with the dollar’s momentum. Trump’s policy platform—anchored on fiscal expansion, renewed tariff regimes, and explicit pressure on the Federal Reserve—is expected to widen the US twin deficits, weaken growth, and amplify inflation risks. The result: diminished appetite for US debt and rising volatility in dollar-denominated assets.

Meanwhile, Europe and Japan are showing signs of renewed fiscal and corporate dynamism. China’s stimulus efforts and its continued push to internationalise the renminbi add further complexity. As these regions attract capital, the longstanding yield differential that favoured the US could evaporate.

“Trump’s policies are poised to inject both fiscal risk and geopolitical unpredictability at a moment when the dollar is already overextended,” Mahtani explains. “That’s a classic recipe for turning points in currency cycles.”

A New Global Allocation Landscape

Today, allocations are heavily overweight the US. American equities now represent nearly 70% of the MSCI ACWI index, and global portfolios are disproportionately exposed to dollar assets—many of them unhedged. This creates the potential for sharp capital reallocation, especially if US assets underperform amid macro headwinds.

There are early signs of capital migration toward emerging markets, commodities, and non-dollar settlement systems. Key EM economies are settling trade in local currencies, exploring digital alternatives, and diversifying their reserves—initiatives that weaken the dollar’s structural advantage over time.

The Investment Implications

If the dollar is indeed entering a downcycle, the implications for investors are vast:

• FX-hedged global assets may outperform as currency risk returns to the fore.
• Emerging markets and commodities could benefit from a weaker dollar and stronger global risk appetite.
• Geopolitical volatility and inflation will demand more tactical currency positioning and risk management.
• Multi-polar monetary dynamics may shift the relative appeal of safe-haven currencies and push reserve managers to rethink long-standing strategies.

An Inflection Point for the Global Order

Beyond markets, there is a wider geopolitical signal: the dollar’s supremacy is not immune to political disruption. The mechanisms that sustained it—stable policy, global trust, and institutional restraint—are now under scrutiny. If the new administration further undermines those foundations, the world may accelerate toward a more fragmented and less dollar-dependent order.

Mahtani concludes: “This is not the end of the dollar, but it may be the end of dollar inertia. That shift won’t happen overnight, but investors should no longer assume the future looks like the past. The next cycle is already taking shape.”