The dollar's weakness against the euro will likely persist amid ongoing trade and fiscal policy uncertainty in the United States, negatively impacting European exports but also reducing the risk of potentially destabilizing U.S. financial policies. Despite expectations that protectionist U.S. trade policies would lead to an appreciation of the dollar, the U.S. currency has depreciated since Donald Trump returned to the White House in January. Meanwhile, U.S. equity markets have reached or remain close to all-time highs, despite the continued risk of trade-related economic disruption from Trump's sweeping tariff strategy. But while the value of the U.S. currency has fallen, domestic and foreign investor interest in dollar-denominated equities appears to be robust, which is somewhat unusual. Dollar depreciation has also been orderly, suggesting it is driven by a gradual shift by private investors into non-dollar-denominated, including euro-denominated assets....
