As we move further into the decade, it’s becoming clear that tectonic shifts are reshaping the global economic and geopolitical landscape—and at the heart of this transformation lies the U.S. dollar. Once the unchallenged linchpin of the global financial system, the dollar now stands at the precipice of a long-term decline. Why? Because what has changed since the start of this year isn’t just a tweak here or there—it’s a wholesale reset of how economies interact, compete, and invest across borders.

A Global Reset in Motion

The world has witnessed a cascade of landmark shifts in recent months. For starters, the U.S. has embarked on its most aggressive trade policy revamp in a century, signaling a break from the globalization-friendly doctrine that defined the post-Cold War era. Germany, long a bastion of fiscal conservatism, has made a historic pivot toward more expansionary fiscal policies—the most significant since its reunification. And, perhaps most tellingly, the global perception of U.S. geopolitical leadership is undergoing a major reassessment, one that hasn’t occurred at this scale since the aftermath of World War II.

These changes aren’t isolated events—they’re interconnected signals of a world that is gradually decoupling from U.S.-led structures and seeking alternative centers of gravity. Together, they lay the groundwork for what could be the beginning of a sustained and significant dollar downtrend.

The End of “Higher for Longer”

For years, the dollar has benefited from a regime of relatively higher U.S. interest rates, stronger economic growth, and the global demand for U.S. assets. But that era—often referred to as “higher for longer”—may be nearing its end.

Forecasts now suggest a path toward a weaker dollar, with the euro poised to appreciate meaningfully over the coming years. A return toward purchasing power parity—around EUR/USD 1.30—would mark a fundamental realignment, not just a market correction. But this is more than a story of shifting exchange rates; it’s a deeper, more structural change in the global economy.

The Three Pillars of the Dollar Bear Case

At the core of this unfolding bear market for the dollar are three key assessments, each reinforcing the other.

1. A Waning Appetite to Fund U.S. Deficits

The U.S. twin deficits—its fiscal deficit and its current account deficit—are no longer being ignored. For years, the world was willing to fund these imbalances, largely due to the dollar’s status as the global reserve currency and the perceived safety of U.S. assets. But that willingness is eroding. Countries are growing more cautious about holding increasing amounts of dollar-denominated debt, particularly as geopolitical risks rise and alternative investment destinations become more attractive.

2. A Peak in U.S. Asset Holdings

The rest of the world has built up enormous holdings of U.S. stocks, bonds, and other assets, but the appetite for continuing to expand these positions appears to be fading. With the dollar perceived as overvalued and financial markets in other regions offering improving risk-return profiles, we may now be past the peak of global demand for U.S. assets. A slow but steady unwinding of these holdings could exert persistent downward pressure on the dollar.

3. A Global Turn Inward—With Fiscal Firepower

Perhaps most crucially, we’re seeing a shift in how countries approach economic management. Governments outside the U.S. are increasingly willing to use domestic fiscal policy to stimulate growth and support consumption, reducing their dependence on external demand and U.S.-led global trade. This rebalancing of growth drivers empowers local currencies and diminishes the central role the dollar has played in global liquidity and capital flows.

What It All Means

This isn’t just another cyclical downturn for the dollar—it may be the beginning of a structural decline. The changes at play are fundamental: a reordering of global economic leadership, a strategic retreat from dollar-centric investing, and a newfound fiscal assertiveness across Europe and other advanced economies.

For investors, policymakers, and businesses alike, this turning point calls for a reassessment of currency risk, investment allocations, and strategic priorities. The dollar may remain dominant for some time, but the era of its unchallenged supremacy could be drawing to a close.

The world is moving toward a more multipolar economic order. And in that world, the greenback will have to share the stage.