Surging US Debt and War Costs Threaten Long-Term Dollar Stability

The US Dollar Index (DXY) is hovering around the 98 level as of mid-April 2026, marking a 1.45% decline over the past year amid persistent structural headwinds. On a broad trade-weighted basis, the greenback has shed nearly 10% of its value since the start of Trump's second term, fueled by volatility from the April 2025 tariff chaos and the January 2026 Greenland escalation. While the currency remains below its 50-day moving average, fiscal concerns persist with national debt hitting $39 trillion and a $200 billion Pentagon funding request for regional conflicts. Analysts suggest that the dollar's recent performance reflects a struggle to maintain stability against a backdrop of geopolitical shifts and fiscal deficits. Investors are now focused on whether Federal Reserve policy can counteract these long-term pressures or if the downward trend will accelerate.