Wells Fargo analysts view current dollar weakness as temporary

The import tariffs imposed by the US President have made investors question the dollar's status as a safe-haven currency, sparking debates about its potential collapse. However, analysts at Wells Fargo believe any weakening of the greenback is unlikely to last. In their view, fundamental factors, including the steady growth of the US economy, buoyed by Donald Trump’s fiscal policies, continue to provide solid support for the currency.

Despite the dollar index dropping more than 10% from the start of 2025, its decline has been limited to less than 4% since late September of last year. According to Wells Fargo analysts, the greenback remains the linchpin of the global financial system, and the current volatility doesn’t signal any loss of its dominance. In fact, the currency is still trading near its 10-year average.

Given these factors, the bank's analysts expect the dollar to stabilize at higher levels by the end of this year and through the next. While the greenback's share of global reserves may gradually decline, Wells Fargo stresses that a full-scale shift away from the US currency remains unlikely, simply because there are no strong alternatives to replace it.