Don’t look now, but the dollar’s on the cusp of its best week in nearly a year.

The greenback headed into Friday up more than 1.5%, the best showing since the week immediately following the 2024 presidential election, when half of US voters wondered to themselves, “What’s the worst that could possibly happen?” while pulling the lever for Donald Trump a second time.

Whether the dollar’s nascent rebound — around 3% since mid-September — proves sustainable is an open question. Some of the gain illustrated below was attributable to political turmoil abroad.

That jump reflects, in part, the euro’s worst week in 11 months and the yen’s poorest showing in 13.

France’s crisis of government rolled on in recent days, weighing on the common currency, while FX traders pondered a return to Abenomics in Japan under Sanae Takaichi who, I’d be remiss not to note, suffered a meaningful setback Friday when Komeito, LDP’s junior coalition partner, abruptly broke off ties.

Not that the political picture looks any better in the US. On many (most) vectors it looks considerably worse. Trump’s lost in a full-on authoritarian delirium. This week alone, he indicted New York Attorney General Letitia James, deployed the Texas National Guard to Illinois and called for JB Pritzker and Chicago Mayor Brandon Johnson to be thrown in jail, among other manifestations of monarchical meshugaas.

It’s remarkable that the dollar’s strong showing came during a week when gold — the dollar debasement trade par excellence — grabbed every headline for a record rally that found spot prices breaching $4,000.

There’s an argument to be made that the greenback was simply oversold, and I assume leveraged funds and sundry “professionals” remain short, which nods to squeeze potential in the event the dollar can sustain a recovery.

Remember: The tariffs should be dollar-positive unless the levies — and readers will pardon the lapse into a colloquial cadence — piss everyone off so much that foreign investors shun US assets.

Of course, saying you’re pissed off is one thing, and actually avoiding US assets is another. You have to own Treasurys, and the largest 10 US companies (eight of which are tech or tech-adjacent) comprise 25% of global equity market cap. Good luck not buying those.

Meanwhile, the September FOMC minutes suggested not everyone on the Committee was convinced of the case for a rate cut last month, and although the US labor market’s plainly cracking, the rest of the economy seems ok and inflation’s sticky.

Notwithstanding Trump’s “hell or high water” approach to forcing the rate cut issue, there’s a fundamental case to be made against aggressive cuts. Particularly given how easy US financial conditions are on several widely-cited metrics, and that’s to say nothing of the stock bubble and near record-tight credit spreads.

Anyway, reports of the greenback’s demise were exaggerated, apparently. But perhaps not greatly. It is, after all, a currency issued by a nation in terminal decline.