EXPERTS have revealed why the US Dollar remains resilient despite Donald Trump’s unpredictable foreign policy with one saying “there is method behind the madness”.
The US President’s actions with regards to claims on Greenland and putting tariffs up and down at a whim should in theory be causing mayhem for the markets and the Dollar – but it isn’t.
Trump said he had struck a deal on Greenland after talks with NATO – as he dropped planned tariffs on eight European countries including the UK.
Stock markets surged overnight with the Nikkei in Japan rising nearly 2% while the Kospi in South Korea passed the 5,000 mark for the first time.
The Dollar has remained stable against Pound Sterling with £1 getting you $1.35 – which has roughly been the same since mid-December.
It has also remained stable against the Euro with €1 getting you $1.15 – also roughly the same since mid-December.
The Dollar remains resilient
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said the Dollar is still the currency of choice for the world and it would take a lot more to affect it.
He added: “The Dollar remains resilient because structural forces outweigh headlines. As the world’s reserve currency, involved in over 70% of trades, its deep liquidity and safe-haven status make it the primary currency of choice. Investors focus on fundamentals – Fed policy, yields, and growth – rather than political noise.
“Trump’s tariff threats and claims on Greenland are viewed as tactical leverage rather than systemic policy shifts. In 2026, a modest softening is likely, driven by growth normalisation and narrowing yield differentials rather than political volatility.
“There is method behind the ‘madness’: it is transactional leverage. Using unpredictability and tariffs as negotiating tools is a strategy designed to extract concessions from trade partners. While this execution creates short-term market ‘mayhem’, it has yet to destabilise the Dollar’s structural dominance, as global markets still find no viable alternative to the liquidity and security of the Dollar.”
Volatility is largely priced in
Prem Raja, Head of Trading Floor at Currencies 4 You, said volatility is already priced in.
He continued: “The lack of real market mayhem suggests investors have moved on from the initial shock and are now looking at things through a far more transactional lens. Wall Street increasingly treats aggressive rhetoric, including this week’s threatened 10% tariffs linked to Greenland, as an opening position rather than a final policy outcome.
“In practice, volatility is largely priced in, with markets reacting to confirmed actions such as customs filings and legislation rather than headlines or social media posts. Looking ahead, the balance of risks for GBP/USD points toward a softer US Dollar through 2026.
“With inflation pressures easing and growth cooling, lower US interest rates are increasingly expected, which would reduce the dollar’s yield advantage and typically weigh on the currency.”
Samuel Mather-Holgate, Managing Director & IFA at Swindon-based Mather and Murray Financial, said the markets knew Trump would pull out of the threat of tariffs.
He added: “The markets didn’t like the threat of tariffs and a potential trade war between parts of Europe and the US. However, when it comes to Trump’s rhetoric and bluster with his enemies and allies, the markets and in particular the Dollar seems to shrug this off.
“Trump is known as the Trump Always Chickens Out (TACO) president and markets see this – they won’t react if they know he will withdraw his threats at the last minute. He has made himself look ridiculous, and the markets like that. They like certainty and that’s actually what Trump is giving.”
Photo by Emilio Takas on Unsplash.
