Dollar strength, energy costs threaten Trump midterm prospects

Dollar hits multi-month highs

The US dollar has climbed to its strongest level since April 2025 as Middle East supply threats drive energy costs upward, complicating President Donald Trump’s economic agenda less than six months before November’s midterm elections. The dollar index — which tracks the greenback against the euro, Swiss franc, Japanese yen, Canadian dollar, British pound and Swedish krona — surged to 102.9 before stabilizing above 101.5, marking a 3.3% advance since the start of the year. American households are facing mounting pressure from rising mortgage rates, surging gasoline prices and elevated borrowing costs during the first two years of Trump’s second term.

White House faces policy dilemma

Trump has repeatedly pressed for a weaker dollar and lower interest rates to improve US export competitiveness and narrow the federal current account deficit, even as economic data failed to support monetary easing. Zafer Ergezen, a futures and commodity markets analyst, told Anadolu that the administration’s desire for dollar depreciation stands in direct conflict with market realities fueled by geopolitical risk. Trump has also lashed out at rising imports from China and other trading partners, seeking to reverse the flow of goods even as a stronger currency makes American products less competitive abroad.

Analyst warns of political fallout

Ergezen said the confluence of currency strength and inflationary pressure arrives at a particularly damaging moment for the administration’s electoral prospects. "The dollar is gaining, interest rates are rising, and inflation is accelerating ahead of the midterm elections — this is not something Trump wants, because mortgage costs are also rising, and many products are becoming more expensive, which is seen most clearly in gas prices," he said. Looking beyond November, Ergezen added that the trajectory of the US-Israel-Iran conflict could force a dramatic policy pivot depending on electoral outcomes: "I think there will be some very serious developments in the US/Israel-Iran war after the elections, as depending on the results, a lasting deal between the parties may be reached or the war could be escalated to a whole another level — the subsequent steps post-elections could prompt Trump to be either aggressive or move in the exact opposite direction of the policies he had been implementing."