The

American dollar

continued to plummet against other currencies on Tuesday, leaving one currency expert to wonder if the United States administration is looking to

devalue the greenback

on purpose.

“There are good reasons to suspect that the

Trump administration

is deliberately engineering a decline in the dollar’s value on

foreign exchange markets

,” Karl Schamotta, chief market strategist at Corpay Inc., said in a note on Tuesday. “

Policy actions

over the last year have not been consistent with making the greenback great again.”

Prior to taking office last year, Donald Trump, J.D. Vance, Scott Bessent and others indicated that a strong U.S. currency wasn’t good for business.

Schamotta said the noise around the “debasement trade” — the devaluing of the U.S. dollar — has risen to cacophonous levels, however the technical signs to back up the phenomenon are absent.

For example, U.S. Treasury yields and inflation expectations are “stable” and capital continues to flow into U.S. denominated assets, he said, adding the U.S. dollar entered 2026 “overvalued.”

Either way, the

greenback

is off to a rough start — a weakening that analysts say could portend more upside for the

Canadian dollar

in the coming months.

“(U.S.) dollar sentiment is taking a beating,” Shaun Osborne, chief currency strategist at Bank of Nova Scotia, said in a note on Monday, as a “

sell America

” or “hedge America” theme buffets the currency.

Osborne observed that the trajectory of the American dollar is “oddly” echoing the early months of the second year of Trump’s first term, when the

U.S. dollar index

, which measures the greenback against a basket of other currencies including the euro, Canadian dollar and the Japanese yen, fell five per cent between mid-January and mid-February 2018. Since mid-January 2026, the index has fallen by 2.5 per cent.

“Loss of support at 97.75 points to more weakness for the index and puts major support at 96.20 at risk of a retest (at least),” Osborne said.

The U.S. dollar index fell below 97.75 late last week and then fell to 96.5 on Tuesday.

The loonie has experienced extreme volatility so far in 2026, opening the year at 72.9 U.S. cents only to plummet 1.4 per cent to hit a 2026

 

low on Jan. 16.

But recent greenback angst has since boosted the Canadian dollar well past where it started the year.

Osborne thinks the Canadian dollar’s rise will be more muted than that of other peers — such as the Australian dollar, which rose again Monday after gaining three per cent last week on its critical minerals strength — due to “flat” oil prices.

For now, the loonie is at the mercy of the greenback.

“We expect the general trend in the (U.S. dollar) to remain the primary influence on the (Canadian dollar’s) performance,” Osborne said.

What’s behind the U.S. dollar selloff? Factors weighing on the greenback include weakened U.S. Federal Reserve autonomy, over-priced stock markets and splintering global alliances, Osborne said.

“Tense domestic U.S. politics may be another headwind for the USD amid rising risks of another government shutdown,” he said.

He also cited reports of a “rate check” undertaken last week by the Bank of Japan and the Federal Reserve Bank of New York that implied “heightened intervention risk.”

On Jan. 23, reports indicated that the New York Fed called banks to “check” on their rates for the U.S. dollar

–

Japanese yen pair, with many speculating that the Fed might be considering intervening to boost the Yen.

Erik Nelson, executive director and macro strategist at Wells Fargo & Co., attributed much of last week’s greenback activity to the rate-check reports but thinks the U.S. dollar selloff is overdone given the limited nature of the checks.

Until those checks expand, he thinks investors should not bet too heavily against the greenback.

Instead, Nelson is eying the Canadian dollar to fall against its American counterpart with a target of 72 U.S. cents.

Wells Fargo held a negative view of the loonie going into the new year due to the fragility of the

Canadian economy

.

Nelson said that while the

Canada–U.S.–Mexico Agreement

“could eventually be resolved favourably later in the year, in the meantime the risks are more toward the negative side for (the Canadian dollar).”

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• Email: gmvsuhanic@postmedia.com