The US dollar, once an undisputed safe haven in times of crisis, is now holding onto that reputation by a thread, according to the latest Bloomberg Pulse survey.
Escalating conflict between Iran and Israel is providing a lifeline for the greenback’s haven appeal. Just over half of the 251 surveyed investors believe the dollar will maintain its role as a refuge amid ongoing attacks. Yet, paradoxically, most participants also expect the Bloomberg Dollar Spot Index to decline over the next month.
“While we expect further dollar weakness, investors now perceive more two-way risks,” wrote Goldman Sachs strategists Christian Mueller-Glissmann and Michael Cahill in a client note. They added that some market players believe recent depreciation may have gone too far, given the continued resilience of US asset returns.
This divergence reveals a shift in global sentiment toward the dollar. Despite fresh geopolitical jitters keeping its decline in check, overall confidence in the currency remains deeply bearish, driven partly by skepticism over President Donald Trump’s policies and their unpredictable global impact.
Interestingly, the share of investors forecasting a drop in Bloomberg’s dollar gauge is at its lowest since February — and the index is on track for its first weekly gain since May. The dollar also found brief support this week after Federal Reserve Chair Jerome Powell warned of inflationary pressure from tariffs and signaled uncertainty about future rate cuts.
Nevertheless, this modest rebound does little to erase this year’s bruising losses: the greenback is down more than 11% against the euro and roughly 8% versus the yen in 2025 so far.
“A weaker dollar is here to stay,” said Kristina Campmany, senior portfolio manager at Invesco Ltd., during Bloomberg’s recent Money & Macro: An Evening with Markets Live event in New York. She pointed to significant shifts in US policy that now demand a premium for holding the dollar.
Meanwhile, higher oil prices due to the Middle East turmoil are expected to stoke inflation and limit the rally in Treasuries. Almost half of survey respondents said elevated crude prices would curb bond gains, while about a third see no impact on US debt.
Yet, bonds remain the preferred haven over equities for many. When asked which asset is likely to deliver better risk-adjusted returns in the next month, 54% of investors backed Treasuries over US stocks.
As geopolitical and economic crosscurrents buffet markets, the dollar’s haven crown looks increasingly tarnished — and investors are watching closely to see if this old safe harbor still holds firm or drifts further out to sea.