The Dollar’s Grip Loosens: Why Diversification Toward the Euro Makes Sense

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WisdomTree’s Insight Article – The US Dollar’s Crown Is Slipping (Oct 2025) explains how structural shifts in monetary policy and global reserves are eroding the greenback’s long-held dominance.

  • With Fed rate cuts narrowing yield advantages and U.S. deficits near 7% of GDP, global investors are re-evaluating dollar exposure and diversifying toward the euro and gold.

  • Central banks are quietly trimming dollar reserves, reflecting a gradual move toward a multi-polar FX systemwhere the euro and alternative assets gain share.

  • For portfolios, a strategic short USD / long EUR tilt can help hedge U.S. fiscal and policy risks while positioning for potential euro strength as monetary cycles diverge.

Is this the start of a lasting shift in global currency power—or another cyclical swing? The full report details how investors can adapt portfolios to the dollar’s changing role.

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