Strong US dollar, mounting energy costs work against Trump’s midterm outlook

American households are under a lot of pressure amid rising spending and long-term borrowing costs, surging energy prices, mounting housing expenses, and interest rates during the first two years of Trump’s second term.

The US dollar rose to its highest since April 2025, reaching 102.9 due to the conflict in the Middle East threatening energy supplies and fueling inflation, before stabilizing just above 101.5.

The US dollar index, measuring the greenback against the euro, Swiss franc, Japanese yen, Canadian dollar, British pound, and Swedish krona, surged 3.3% compared to the end of last year.

Zafer Ergezen, a futures and commodity markets analyst, told Anadolu that US products lose their competitive edge as the dollar strengthens.

Ergezen said Trump had wanted lower interest rates throughout last year and this year. He repeatedly criticized former Federal Reserve Chair Jerome Powell, even as economic data did not support rate cuts.

Trump wants the US dollar to depreciate and liquidity to rise so that the federal government’s current account deficit can be reduced to a more reasonable level for the economy to potentially run a trade surplus in the future.

The president also criticized rising imports from certain countries, especially China.

“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.

“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,” he added.