King Dollar’s crown has weathered countless storms – but the recent market whirlwind has people asking if this time is different.

Over the past few weeks, global investors have witnessed unexpected turbulence: the reserve currency, long the world’s safe-haven stalwart, took a stunning plunge, and US Treasury bonds were dumped in a selloff unprecedented in its ferocity.

The Dollar Index (DXY) slumped to levels not seen since early 2022, and instead of rallying to safety, bond yields spiked as prices fell. In plain terms, none of this was supposed to happen – in times of turmoil, investors traditionally flock to dollar assets, not flee them.

Is King Dollar merely under stress, then, or are we watching the beginning of a genuine threat to its reign?

At the center of the storm is Donald Trump’s trademark tariff-heavy trade policy – essentially Trade War 2.0. In an upgrade of his earlier playbook, POTUS-47 has ratcheted up tariffs on friend and foe alike, presumably to claw back American trade deficits. Yet each new tariff threat or Twitter outburst from Trump has been met with a deepening rout in US Treasuries. It’s as if bond traders have developed a reflex: Trump opens mouth, we sell bonds.

Yields on US debt jumped at a pace that veteran analysts called alarming, and currency traders delivered their own verdict by pounding the dollar down. Even when Trump abruptly hit the brakes – announcing a 90-day “tariff pause” – the damage had been done. The bond market remained spooked, and the dollar kept sliding.

This irrational behaviour – dollar dive and bond selloff – is more than just another bout of market jitters. There’s a palpable sense that we’re seeing something structural crack. No doubt King Dollar has endured plenty of stress in the past – twin deficits in the 1980s, the post-2008 money printing binge, even periodic government shutdowns – and always emerged with its dominance intact. Those episodes were painful but ultimately transient, hitting the dollar like a fever that eventually........

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