Peak Trump Could Herald a Dollar Turnaround
- Written by: Gary Howes
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Canadian President Carney and Donald Trump. The House voted against Trump's tariffs on Canada. Official White House Photo by Daniel Torok.
One investment bank asks whether the dollar's fortunes will improve as Trump's powers wane.
Handelsbanken are out today with an anti-consensus view on the dollar: that it could see improved fortunes now that we're passing 'peak Trump'.
"If this idea holds, it suggests a reversal in the US market's negative momentum, leaving the question of relative performance," says Michel Gubel, an economist at Handelsbanken.
The concept is simple: Trump's likely past the high water mark of his powers as internal dissent grows with his Republican Party squaring up for the November midterms.
If Trump is a driver behind USD weakness - the de-dollarization them - then surely his waning powers will reverse that trend.
"We think the market is at a crossroads between the dedollarization story (USD lower) and the macro story (USD higher)," says Sarah Ying, FX strategist at CIBC Capital Markets.
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New signs of peak Trump emerged overnight when the House voted to rescind tariffs that the president imposed on Canada last year, in what has been seen as a rare bipartisan rebuke of his trade policy.
Certainly, one leg of dollar weakness has been Trump's hawkish trade policy stance, and direct rebukes to the policy would therefore play positive for the dollar.
"The typical signs of a political peak are visible in declining approval ratings, legislative setbacks (including adverse Supreme Court rulings) and growing internal opposition," says Gubel.
The dollar fell fell 10% in 2025 and is down a further 1.50% in 2026, and the consensus of investment bank forecasters looks for further declines.
"Trump’s unpredictable approach to policy, including his efforts to put pressure on the Fed for rate cuts, is undermining confidence in the greenback and amplifying the trend - and raising partly-justified worries over a global de-dollarisation trend," says Kallum Pickering, an economist at Peel Hunt.
However, Handelsbanken says the 'Peak Trump' trade could upend the consensus view on the dollar.
"A straightforward replay of Trump's first term would suggest a reversal in the recent trend, with the "peak" concept coming into focus: reconciliation towards a stronger dollar, markets rotating away from high beta exposures and improved relative US performance," says Gubel.
Handelsbanken says the thesis means it is worth considering actively hedging against a dollar rebound for market participants that would be exposed to its recovery.
