The White House has reiterated that maintaining a strong U.S. dollar remains an official pillar of economic policy even as the greenback struggles to regain ground from a multi-year slump and investors continue to balk at increasing exposure to dollar-denominated assets.

Despite recent comments from senior administration figures that Washington supports a strong dollar — a stance long associated with confidence in the U.S. economy and its global financial role — market participants are holding back, reflecting broader macroeconomic and policy concerns.

Investors entered the year anticipating a more supportive policy mix but have been confronted with persistent uncertainty, including a significant 2025 drop in the dollar index and mixed signals from U.S. monetary authorities.

The currency remains down around one percent year-to-date on top of roughly a nine percent decline in 2025, even after modest short-term rallies.

Many foreign exchange strategists and asset managers attribute the lingering investor caution to a combination of fiscal and monetary uncertainties that have clouded the outlook.

Goldman Sachs strategists noted that recent policy unpredictability may be durable enough to prevent the dollar from fully recovering lost ground, a view echoed by market participants wary of tariff threats and evolving economic policy.

Meanwhile, major investors such as Europe’s largest asset manager have publicly signalled a rotation away from dollar assets, advising clients to diversify toward European and emerging markets as concerns about long-term dollar strength persist.

Economic data and central bank expectations are also shaping sentiment.

Expectations of further interest rate cuts priced in by markets, along with signs of a weakening U.S. labour market, have added downward pressure on the dollar even as Treasury yields and corporate earnings remain competitive.

Some institutional analyses suggest the dollar’s structural headwinds — including persistent U.S. fiscal deficits and continued international portfolio diversification — are likely to temper its appeal as a default safe-haven asset over the next year.

Yet the dollar’s status as the world’s primary reserve currency persists, supported by the depth of U.S. financial markets and its central role in global transactions.

That duality — an official U.S. endorsement of a strong currency alongside investor reluctance to fully embrace it — encapsulates the current state of the dollar: fundamentally important but operating in a market context defined by caution, recalibration and evolving expectations about future policy paths and economic leadership.