Dollar Holds Reserve Status—But Stocks and Bonds May Keep Struggling

​The U.S. dollar may be losing altitude, but don’t count it out just yet.

Despite a sharp slide in recent weeks, economists say the dollar’s role as the world’s reserve currency is still intact—for now. But here’s the catch: U.S. stocks and bonds could keep underperforming, and investors are starting to look for alternatives.

The ICE U.S. Dollar Index just hit its lowest level in three years, even as Treasury yields rose, flipping the usual safe-haven script. In past crises, global volatility sent investors racing into dollars. This time, the dollar’s falling alongside U.S. assets—raising alarm bells.

Some blame the Trump administration’s aggressive tariff policies, which have injected massive uncertainty into markets. And there’s more than just sentiment at stake. Bitcoin and gold are surging, as investors search for protection against currency and political risk.

Still, experts like Steven Ricchiuto at Mizuho caution against declaring the dollar dead. “There will come a day when the global markets are denominated in something other than the U.S. dollar, but that day is a long way off,” he said.

Others agree. “There’s no clear alternative right now,” said Will Compernolle at FHN Financial. “Yes, there’s some rotation out of U.S. assets—but the death of the dollar is being exaggerated.”

Meanwhile, cracks are forming elsewhere. U.S. stocks just logged one of their worst sessions of 2025, with the Dow tumbling 971 points, and Treasuries falling even as yields jump, signaling growing investor unease.

And while foreign investors have been pulling back, much of their capital is still parked in the U.S. As Jeffrey Schulze at ClearBridge notes, “European stocks look cheap by comparison, and American investors are still underweight overseas.”

​Bottom line: The dollar’s throne isn’t gone—but the shine is fading. And unless policy stability returns, U.S. markets could remain under pressure while global capital starts to look elsewhere.