'Bye America' Dollar Slide Deepens with No End in Sight
By Reuters | 28 Jan, 2026

The dollar has lost 2.5% in January against other currencies after a 9% slide in 2025 on fears Trump may be trying to weaken the US currency in an effort to boost exports.

Options traders have turned overwhelmingly negative towards the dollar this week, after President Donald Trump brushed off the U.S. currency's 2.5% slide this month, pushing the cost of derivatives to buy other currencies to the highest in months on Wednesday.

Three-month risk reversals for the euro, which reflect the difference in the price of options to buy the currency and the price of those to sell it, shot to 1.38 percentage points, their highest since last April's five-year peaks and up from around 0.28 a week ago. 

The euro itself hit $1.20 for the first time since mid-2021 on Wednesday

Sterling three-month risk reversals reached -0.04, still showing some bullishness towards the dollar, but this was the highest since last May. They were at -0.475 at the start of January. 

The pound, meanwhile, has also risen to its strongest against the dollar since July last year.

"Participants in the rest of the world continue to trim exposure to U.S. assets, in reflection not only of the increased policy volatility that continues to emanate on the trade front from Washington DC, but also amid speculation that the Trump administration might be pursuing what one could reasonably call a ‘less strong dollar’ policy," Pepperstone senior research strategist Michael Brown said in a note. 

He added that the "bye America" trade has been a dominant theme for currencies.

Trump said on Tuesday the value of the dollar was "great", when asked whether he thought it had declined too much. 

The Japanese yen is set for its strongest monthly performance against the dollar since last April, as speculation of joint Japanese-U.S. official intervention to support the Japanese currency persists. 

Three-month risk reversals have hit -2.0, down from -0.575 at the beginning of the year. Unlike risk reversals for the euro and sterling, a more negative risk reversal for the yen reflects more bullishness towards the currency and more negativity towards the dollar.

(Reporting by Amanda Cooper; Editing by Louise Heavens)