Back in January 2025, Adam Turnquist built a chart. LPL Financial’s chief technical strategist had overlaid the U.S. Dollar Index’s trajectory across Donald Trump’s two presidential terms — a simple comparison, he figured, to see how the second was shaping up against the first. He’s been updating it every couple of months since, sharing it with his head of macro research each time with the same running joke: why do we even try to predict?
“It’s the exact same pattern,” he told Fortune. “Last week, I started refreshing data, and here it is.”
The pattern matters now because of where it says the dollar is. After a 13% decline over 269 trading days from its January 2025 peak, the Dollar Index has broken out above resistance near the 100 level — the same stage-three move that followed the Trump first-term bottom in early 2018. If that playbook holds, Turnquist thinks the dollar may be entering another sustained climb.
Two terms, one script
The symmetry in the chart is almost uncomfortable to look at. “The dollar has tracked so closely, not only in the magnitude but the duration of the moves,” he said. After Trump’s 2016 victory, the Dollar Index rallied roughly 8% into a January 2017 peak, then reversed hard — falling about 15% over 293 trading days before bottoming in early 2018. From there, it staged a 17% climb into a 2020 high, a run that ended only when the pandemic arrived.
The 2024 election replay: a rally into a January 2025 peak, a 13% decline over 269 trading days, a bottom in early 2026. The percentages are close. The trading-day counts are close. The shape is close enough that Turnquist keeps making the same joke.
He’s also the first to say it doesn’t quite make sense. The macro backdrops look nothing alike. The 2016 reflation trade ran on an accommodative Federal Reserve and inflation running well below target — conditions with no analog in the current cycle, where the Fed is still wrestling with an inflation rate that refuses to return to 2%. The only macro overlap Turnquist can find is elevated oil prices. Everything else has changed.
So if the conditions are different, what’s running the same script?
One possibility Turnquist considered: Trump wanted it that way. He ruled it out quickly. “We haven’t heard him talk about the dollar lately,” he said. The better explanation is structural. “Initial excitement of Trump’s policies being implemented, the big reflation trade in 2016, then reality sets in — it takes a while for policy to set in with growth, the trade fizzled out a little bit, then rebounds in a pretty material way,” he said. Both terms followed that arc. Interest rates played a role in both as well, Turnquist acknowledged — “part of it is where interest rates are” — but the dominant force, in his reading, was growth expectations, not yield differentials.
His answer has two layers. The first is policy sentiment. “Taking politics out of it,” he said, “the policy initiatives are clearly pro-growth — lower taxes, more incentives for corporate America, incentives for companies to invest and bring back manufacturing. All of those factors are catalysts for growth, especially with all the curveballs we’ve faced.” In both terms, the election triggered the same initial bet on American reflation, which produced the same initial rally — and in both terms, that bet met the same friction of reality, which produced the reversal.
But beneath the policy layer, he sees something more durable: the dollar as a barometer of relative economic strength. Before the Covid pandemic arrived on American shores in 2020, after all, the U.S. economy had surprised throughout Trump’s term with decent job growth, low interest rates and a strong stock market. “When the U.S. economy is outperforming other economies, the dollar tends to strengthen,” he said. “In a simple way, that’s what this chart is — a testament to the U.S. economy.”
That dynamic is more pronounced this cycle because of where the outperformance is concentrated. Foreign investors who want exposure to the AI trade — to the hyperscalers, the semiconductor names — have to sell their local currency to buy dollar-denominated assets. That steady flow of conversions amounts to a structural bid for the dollar, one that has little to do with the White House and everything to do with where the technology revolution is headquartered. “You look at the AI trade, you look at the tech names and you want to own that,” Turnquist said. “You sell your local currency to go fund dollar purchases of one of the hyperscalers or one of the semiconductor companies.”
The Biden counterfactual
The Trump-era symmetry looks even more striking set against the dollar’s path under Joe Biden, which followed a completely different shape. The Dollar Index started Biden’s term near 90 in January 2021 — after dipping to its lowest level since 2018 — and had climbed to roughly 108 by the time he left office in January 2025, a gain of well over 15%, one of the stronger full-term performances for the currency in decades. But the drivers were nothing like the Trump-era pattern: the dollar surged as the Fed launched an aggressive hiking cycle to fight the biggest inflation surge in 40 years, pushing the index above 110 by 2022.
That contrast cuts to the heart of the “why” question. Biden’s dollar story was fundamentally a Fed-and-inflation story — rate differentials doing the work. Trump’s two terms, by contrast, show a distinct election-cycle shape: an initial sentiment-driven rally, a reversal as reflation hopes fade and reality sets in, then a rebound tied to actual economic outperformance. It’s the difference between a currency moved by monetary policy versus one moved by shifting bets on relative growth and American exceptionalism.
Some critics have pointed to a roughly 16% decline in the dollar’s purchasing power under Biden amid high inflation — a different metric than the index’s point gains, but a reminder that a strengthening DXY and a weakening consumer dollar can coexist. To be sure, purchasing power has eroded again under Trump’s second term, though more modestly, as the inflation rate simply refuses to return to the Fed’s 2% target, and some watchers think it will shoot up to 4%.
How long will the dollar stay strong?
Turnquist has little patience for the reserve-currency displacement narrative that surfaces every time the dollar sells off. The scenario requires not just a competing currency but a Treasury-scale liquid market — something he doesn’t see forming. “It’s not like you can go trade in yuan or the euro or crypto or whatever.” China, he noted, has tried repeatedly to promote yuan-based settlement and hasn’t gotten far. “They’ve tried and tried and tried, and you can’t trade in yuan.” Roughly 90% of foreign-exchange transactions involve the dollar; the alternatives — gold, Treasuries, the euro — trail far behind.
The nuance he draws is between diversification and abandonment. “There’s been a diversification away from the dollar, and that’s what central banks have done,” he said. “But there hasn’t been a boycott in any material way that suggests it’s the end of the dollar.” The figures bear him out: roughly 90% of foreign-exchange transactions involve the dollar, with gold, Treasuries, and the euro trailing far behind as alternatives.
Any real reserve-status shift, he argues, would require both a competing currency and a Treasury-scale liquid market — conditions he doesn’t see forming anytime soon. “Maybe in my lifetime” we will see the dollar displaced as international reserve currency, he said, rummaging through his office for a book about the history of currencies.
“At some point it will happen,” he acknowledged, noting that different regimes have cycled through, “probably for thousands of years.” Noting the ever-mounting problem of the $39 trillion-plus national debt, he added, “you look at our fiscal responsibility —if you can use that word —the deficit, if that continues, then, yeah, at some point people will be worried about owning the dollar, owning Treasuries,” but a lot of things would have to happen to displace the dollar. “Certainly not this year or next year,” he added.
A country divided, but still spending
Perhaps the most telling wrinkle in Turnquist’s analysis comes from consumer sentiment data. Conference Board confidence figures have shown a sharply polarized gap through 2026 — Republicans reporting a healthy economy, Democrats reporting a terrible one, with the divide at extremes he hasn’t seen before. “There’s always a divide,” he says, “but it’s at extremes right now.”
And yet, when you look past the survey responses at what people are actually doing, the story changes. “Actions speak louder than words,” Turnquist said. Spending data shows consumers and companies continuing to invest and buy despite the political chasm in how the economy is perceived.
That gap between rhetoric and reality may be another story behind the chart: a currency market that, for all the noise around tariffs, Fed independence fights, and reserve-currency doom-saying, keeps tracking the same fundamental signal it always has — where capital believes growth is strongest. Turnquist was surprised it stuck to the script this closely.
“What it boils down to this time and probably the previous episode,” Turnquist said, “is the dollar is the gauge of relative economic strength.” The chart, for now, is still following the script of “the American exceptionalism theme.”
