Trust is hard to earn and easy to lose. While markets assess Donald Trump's first 100 days in office, believers in historical signs point to an event in late April 1925. One hundred years ago, Winston Churchill made what is widely regarded as the greatest monetary policy mistake in history — he tried to return the British pound to the gold standard. The result? The era of sterling dominance came to an end. Could this be a sign that the U.S. dollar's throne is beginning to shake?

The greenback is used in around 90% of cross-border transactions, significantly more than its share in global central bank reserves or the U.S. share of global GDP. The dollar functions as the "plumbing" of the global financial system, so expecting it to be dethroned outright would be naive.

U.S. Dollar Performance

What is more realistic is the beginning of a long-term downtrend in the USD index. Indeed, the last sustained upward trend began when the U.S. credit rating was downgraded in 2011. Trust gained, and trust lost — these are not empty words!

Due to White House policy, doubt surrounding the U.S. dollar and American assets in general have emerged. Former allies have become Washington's arch-enemies, while a long-standing adversary — Russia — is now nearly a close friend. Can one realistically expect China and Japan to keep buying U.S. Treasuries when massive tariffs have been imposed on both nations? Unsurprisingly, investors have turned away, and the USD index has shown the worst performance ever during the first 100 days of any presidency. Under Donald Trump, the dollar has fallen by 10%, a mirror image of events when Ronald Reagan entered the White House.

USD Dynamics Under Various Presidents

U.S. stocks are rebounding as April ends, but the dollar refuses to follow suit. According to Danske Bank, it would be naive to think that the peak of political uncertainty is behind us. The current 90-day grace period is only temporary, after which trade conflicts are expected to escalate. Trump is not one to back down. He intends to use tariffs to fill the budget gap caused by extending the tax relief period.

The Tax Foundation believes this is impossible. This conservative group estimates that tariffs will bring in $167 billion in 2025. But in 2022 alone, U.S. households earning less than $179,000 per year paid $600 billion in income tax.

The math shows that Trump's plans are unrealistic — but that doesn't stop the U.S. president.

Technically, on the daily chart of EUR/USD, bulls have made a second attempt to break through resistance at 1.14 and push the pair out of its short-term consolidation range. So far, everything is going according to buyers' plans. However, for the rally to continue, the pair needs to break through the local high at 1.1425, which would open the door to further long positions.