The US dollar has surrendered some - but not all - of its safe-haven status since 2024, according to a note from ING published on Monday. The bank cautioned that, despite a notable decline in the dollar's value last year, there is no evidence of a sweeping drop in global demand for the currency.
ING pointed to the dollar index's roughly 10% fall over the prior year, describing it as the currency's worst annual performance since 2017. The bank also identified several political and policy headwinds that have weighed on the greenback, including erratic US trade policy, tariff threats from US President Donald Trump aimed at allies, and public criticism of the Federal Reserve.
In its analysis, ING set out several findings about the dollar's evolving role:
- The dollar has lost a slice of its safe-haven value relative to 2024, based on a three-month correlation calculation between the dollar index and US stocks and 10-year Treasuries.
- Private investors remain broadly invested in US assets; they hold more than 80% of foreign holdings of US assets.
- At present, dollar weakness appears to be more cyclical than structural.
- When examining usage of the dollar in global assets, liabilities, market turnover and transactions, ING finds no signs yet of an acceleration in de-dollarisation.
The note also highlighted the importance of the Federal Reserve's independence for international financial stability. ING warned that if the Fed were perceived to be cutting rates inappropriately, that loss of confidence could precipitate "a run on the dollar."
On exchange-rate projections, ING does not expect the dollar's fall this year to match the scale of last year's decline. The bank projects the euro will finish the year at $1.22, compared with prevailing levels around $1.18.
This assessment frames a currency market in which the dollar's dominant role remains intact even as its safe-haven characteristics have softened. The note underlines the contingent nature of confidence in the currency - stable so long as core foundations like central bank independence hold - and offers a measured outlook for euro-dollar movement through the year.