Uncertainty over US policy and concerns about the Federal Reserve's independence have caused significant volatility in the dollar, impacting metals, currencies, stocks, and bond markets worldwide, and triggering a "Sell America" movement.
On February 4, 2026, at 2:56 AM, Reuters reported that the US dollar, the world's leading reserve currency, was facing severe volatility amid unpredictable White House policies and concerns about the independence of the Federal Reserve, leading to a resurgence of the "Sell America" sentiment.
While many analysts expect the dollar to continue weakening, a sudden rebound can be just as damaging to markets as a sharp drop. The dollar index plunged nearly 2% in a single week in January, hitting a four-year low, before quickly recovering and sparking turmoil in several markets, particularly precious metals.
1.) The metal market is in turmoil.
The dollar's rebound in the last two trading days, after Donald Trump nominated Kevin Warsh as the new Federal Reserve governor to replace Jerome Powell, triggered a sell-off in the metals market.
Gold, which had its best performance in over 50 years in January, fell 5% on Monday after its sharpest plunge in decades earlier, although it recovered partially on Tuesday. Silver and copper also declined from their recent highs, while Brent crude oil is poised for its worst week in nearly two months.
Societe Generale stated that speculative strategies based on the assumption that the dollar would continue to weaken due to the Fed's independence were sold off rapidly in the metals market.
2.) Currency exchange rates are highly volatile.
The foreign exchange market, with a daily volume of approximately $10 trillion, has seen increased volatility, with the three-month forward volatility indicator for the euro/dollar pair hitting its highest level since July.
Capital Economics points out that the dollar is beginning to move in isolation from traditional fundamentals such as interest rate differentials between the US and Japan or Europe. Meanwhile, Barclays estimates that the dollar faces increased policy risk, making it more susceptible to White House statements and potentially making it more difficult for foreign investors to assess the value of US stocks and bonds.
3.) The Sell America trend?
Foreign investors hold nearly $70 trillion in U.S. assets combined, more than double in the past 10 years, but European fund managers are beginning to reassess the risks.
Bank of America warned that if the dollar weakens uncontrollably at a rate of around 5% per month, it could trigger a sharp sell-off in long-term U.S. government bonds and tighten financial conditions.
4.) Investors are shifting towards risk reduction.
Oliver Blackbourne, multi-asset fund manager at Janus Henderson, said he has adjusted his portfolio to be more neutral and reduced his holdings in stocks and gold over the past two weeks to cope with volatility.
John Stopford of Ninety One stated that he has purchased both rising and falling bond yield options to hedge against uncertainty surrounding the direction of yield rates. Meanwhile, several hedge funds have begun reducing their investments in North American assets due to ongoing trade tensions and policy uncertainty.
Reference: www.reuters.com
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