As the nation’s money supply reached new all-time highs, the US dollar index (DXY) saw its sharpest first-half fall in more than 50 years.
According to Bloomberg, the DXY saw a 10.8% decrease in the first half of 2025, the largest since it fell 14.8% in the first half of 1973, during the administration of Richard Nixon.
The US money supply has expanded to a new record high at the same time as the dollar dumping.
As of May 2025, M2, which measures the total amount of easily accessible money moving through the US financial system, was $21.942 trillion, breaking its previous top of $21.749 trillion set in April 2022, according to the most recent data from the Federal Reserve Bank of St. Louis (FRED).
The second half of the year will probably not be better for the US dollar, according to Meera Chandan, co-head of global FX strategy at JPMorgan, as the amount of money in the nation soars.
Chandan predicts that the dollar will underperform other major currencies in the upcoming months due to America’s growing deficits and national debt and Europe’s improving fiscal outlook in a recent episode of JPMorgan’s Making Sense podcast.
Overall, the outlook remains pessimistic. It will be really difficult for us to modify our perspective there, in my opinion. To set particular goals, we have the dollar/yen at 140 JPY, the euro/dollar at $1.20 to $1.22, and the dollar/CNY (Chinese yuan) at 7.10 CNY.
As you can see, it’s still a somewhat pessimistic outlook, and it’s a broad one at that. We’re looking for a $0.68 for cyclical currencies like the Australian dollar. And the rationale for it is much the same as the reason we became pessimistic earlier in the year: the US statistics will moderate and spread to the rest of the world. Clearly, European fiscal policy has become more growth-supportive, and wherever possible, it is assisting fiscal policy outside of the United States in becoming more growth-supportive.
Lastly, the structural problems in the US must be given some leeway, but generally, the outlook is constant and remains firmly dollar bearish.
