March 2025, Singapore — According to a deep technical and fundamental analysis released by DBS Bank, the dollar's long-standing position as the world's primary safe-haven asset is facing unprecedented structural pressures. This shift is the result of a combination of diverging global monetary policies, fragmented geopolitical landscapes, and the accelerated evolution of digital currency systems, prompting investors to reassess the core logic of currency stability over the next decade.
Reconstruction of Dollar's Safe-Haven Appeal
For decades, whenever financial markets were turbulent or geopolitical risks heightened, investors prioritized moving into dollar-denominated assets, keeping it firmly at the top of global reserve currencies. However, DBS analysts point out that multiple factors are shaking this traditional model. The U.S. government's continuously expanding fiscal deficit has raised long-term concerns about debt sustainability; meanwhile, the Federal Reserve's policy path is increasingly diverging from those of other major central banks, leading to heightened volatility in interest rate differentials and diminishing the dollar's appeal. More critically, the rapid advancement of central bank digital currencies (CBDCs) and the widespread signing of bilateral local currency settlement agreements are gradually undermining the dollar's monopoly in global trade and payments.
Market data from early 2025 reflects this subtle shift. Although the dollar index (DXY) can still experience brief rebounds during certain risk-averse scenarios, its gains are noticeably narrowing and the duration of these rebounds is shortening. Capital flows are showing a trend towards diversification: gold, the Swiss franc, and even some relatively stable digital assets are becoming new safe-haven options. This behavioral change indicates that the boundaries of traditional safe-haven assets are expanding.
Technical and Fundamental Resonance Reveals Trends
DBS's analysis cleverly integrates technical charts with macro fundamentals, revealing deeper market signals. Technically, key long-term support levels for major dollar currency pairs are being frequently tested. For instance, EUR/USD has established a new trading bottom above 1.08 between 2024 and 2025, reflecting sustained demand for the euro. Additionally, the frequency of interventions in USD/JPY has noticeably increased, indicating that official institutions are intentionally trying to curb the dollar's excessive strength. These technical patterns collectively point to one conclusion: the market's unconditional enthusiasm for the dollar is waning.
From a fundamental perspective, the global reserve structure is quietly transforming. The latest COFER data from the International Monetary Fund (IMF) shows that while the dollar still dominates the official foreign exchange reserves of various countries, its share has been experiencing a moderate decline for several consecutive years. This is not a precursor to the dollar's collapse, but rather a slow contraction of its relative dominance. The core drivers of this trend include deepening regional economic integration, the formation of a multipolar trade system, and an increasing pursuit of financial autonomy.