The dollar has already dropped 10% from its peak last year and hit lowest level in a year against the euro last week, as well as against a wider basket of currencies.

The greenback was on an impressive bull run for around 18 months, the outsized gains hitting a two-decade high against a basket of currencies last September.

But while there will still be occasional daily upticks, the U.S. currency is now on a downward trend that we expect to continue throughout the rest of 2023.

The sustained dollar correction will be largely driven by markets aggressively pricing-in that the US Federal Reserve is pretty much at the peak of its tightening agenda – an agenda that supported the currency throughout 2022. There’s a growing consensus that the Fed cannot, should not, and will not keep on raising rates much longer.

Last month’s banking crisis has also weighed on the dollar. In addition, improving European growth, a possible potential U.S. recession, and China’s reopening are all putting the squeeze on the greenback.

It’s a perfect storm that will lead to the dollar being one of the biggest losers of 2023.

There is a transition underway from a bull to a bear cycle for the dollar and that this will shift the global investment environment in a profound way.

Stock markets outside the U.S., particularly those in emerging markets, typically perform well when the dollar is weaker.

U.S. large caps and multinationals are also likely to do well as much of their profits are generated in countries where the currencies are becoming stronger.

Sectors that can be expected to do well with a weaker greenback include energy and industrial commodities because they are traded in dollars and, therefore, as the dollar declines, they become less expensive for non-U.S.-based buyers.

Tech should also do relatively well, as much of the revenue also comes from outside the United States.

With the dollar’s rally coming to an end, which will have an impact on global investors, they should now be re-evaluating their portfolios to seize the opportunities in a new cycle.

Furthermore, the U.S. dollar's dominance is in decline as Russia and Saudi Arabia eye the Chinese yuan for oil trades, and investors might need to begin to revise their long-term investment strategies.

Oil is one of the most important and widely traded commodities in the world, and it has traditionally been priced and traded in U.S. dollars. This has given the U.S. dollar a dominant role in global financial markets, as countries that want to purchase oil must first acquire US dollars in order to do so.

If oil trading were to shift away from the U.S. dollar, it would dramatically reduce the demand for U.S. dollars, which would lead to a decrease in the value of the U.S. currency. This could have a number of ripple effects throughout the global economy, including hugely increased inflation in the United States and potentially destabilising effects on financial markets.

The dollar being in retreat can jolt portfolios, especially if they aren’t properly diversified.

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London-born Nigel Green is founder and CEO of deVere Group. Following in his father’s footstep, he entered the financial services industry as a young adult. After working in the sector for 15 years in London, he subsequently spent several years operating within the international space, before launching deVere in 2002 with a single office in Hong Kong. Today, deVere is one of the world’s largest independent financial advisory organizations, doing business in 100 countries and with more than $12bn under advisement. It specializes global financial solutions to international, local mass affluent, and high-net-worth clients. In early 2017, it was announced that deVere would launch its own private bank. In addition, deVere also confirmed it has received its own investment banking license.