Dollar Decline & “Sell America”: What’s Behind the US Currency’s Fall?

The U.S. Dollar is experiencing a sustained decline, falling to levels not seen in four years. As of February 16, 2026, the dollar is down 9.4% over the past 12 months, and nearly 10% for 2025 alone, when measured against a basket of foreign currencies. This weakening isn’t occurring despite a relatively robust U.S. Economy – with an annualized growth rate of 4.4% last year and declining inflation – but rather in spite of it.

The divergence between economic indicators and currency performance is striking. The stock market has also seen gains, rising nearly 12% over the last year. Yet, investor confidence in the dollar remains low. Against the British pound, the dollar has lost 8% in the last 12 months, a surprising result given the U.K.’s comparatively anemic economic growth of 1.3%. The euro has also strengthened considerably, with the dollar now buying only 84 cents in Paris – a 12% decline against the European currency over the same period. European equity markets, as measured by the Stoxx Europe 600, are up nearly 4% year-to-date, while the S&P 500 is down 0.14%.

Analysts are pointing to a “Sell America” trade as a key driver of this trend. ING analyst Francesco Pesole identifies several headwinds keeping the dollar down, despite the U.S. Economy’s technical strength. A key concern is the labor market. While January job creation numbers were unexpectedly high, economists believe these figures may be revised downward, as they could represent a statistical anomaly. The Federal Reserve’s mandate to support the labor market means that weak job numbers could prompt further monetary easing, potentially exacerbating the dollar’s decline.

The dollar’s weakening is prompting debate, particularly given the views of former President Donald Trump. He has expressed the belief that a weaker dollar is “great” for America, a sentiment that contrasts with the concerns of many in the financial community. However, the situation is more nuanced than a simple positive or negative assessment. The decline is creating a “double-edged sword” for the U.S. Economy, according to some observers.

Several factors are contributing to the “Sell America” sentiment. Uncertainty surrounding Trump’s policies and unpredictable statements are weighing on investor confidence. His past threats of trade wars, including a dispute over Greenland – where he threatened 10% tariffs on eight European countries if they refused annexation of the island – have rattled markets. Even his subsequent reversal on the Greenland issue didn’t fully restore confidence.

Further undermining the dollar’s credibility are Trump’s repeated attacks on the Federal Reserve and its chairman, Jerome Powell. His attempts to influence the Fed, including proposing a replacement for Powell, raise questions about the central bank’s independence – a crucial element for maintaining trust in the dollar.

While a massive flight of investment from the dollar seems unlikely at present, the “Sell America” strategy is gaining traction. Investors are increasingly shifting assets out of dollar-denominated holdings, with some turning to gold, which continues to appreciate in value. Approximately 40% of U.S. Treasury bonds held outside the country are reportedly in European hands, suggesting that a coordinated sell-off could represent a significant challenge to the U.S.

The shift in sentiment is also reflected in a changing perception of the dollar as a safe-haven asset. According to the head of investment at Amundi, the largest asset manager in Europe, “the dollar is no longer a value refuge.” This is a significant departure from its traditional role and underscores the growing concerns about the U.S. Economic and political landscape.

The current situation echoes concerns raised in early 2026, coinciding with the publication of the Doomsday Clock, which measures the risks to the planet. The clock was moved closer to midnight, its most ominous setting since 1953, reflecting heightened global anxieties. The dollar’s decline in January mirrored this period of increased global risk perception.

The podcast “La Story” from Les Echos, recorded in February 2026, featured insights from Nessim Aït-Kacimi, Caroline Mignon, and Guillaume Benoit, all journalists specializing in financial markets. Their analysis highlights the complex interplay of economic data, political rhetoric, and investor behavior driving the dollar’s downward trajectory.