(Bloomberg) -- The US dollar may lose its traditional safe-haven status as global markets adjust to a new geopolitical order, according to Deutsche Bank AG. 

“We do not write this lightly. But the speed and scale of global shifts is so rapid that this needs to be acknowledged as a possibility,” said George Saravelos, the bank’s global head of FX strategy, in a note to clients. “It is hard to over-estimate the scale of change taking place in global economic and geopolitical relations in a matter of days.”

Deutsche Bank’s concerns follow a slump on the dollar on Tuesday that has caught out investors betting on further strength. A broad gauge of the greenback fell as much as 0.7% even as the US moved forward with tariffs on its main trading partners, which many viewed as likely to bolster the currency.

“What stands out in today’s market reaction is that the dollar is not strengthening materially,” Saravelos wrote. “We would not have expected these market moves at the start of the year.”

Saravelos highlights a declining historical correlation between the dollar and risk assets, and the growing US current account deficit, which he says has typically marked the limits of dollar “overvaluation.” His team remains neutral on the US currency for now.

The European Union’s efforts to rapidly ramp up defense spending to adjust to US President Donald Trump’s abrupt pullback of American security in the continent is also playing a role. Last week, Deutsche Bank said that caused it to drop its long-standing negative outlook on the euro.

“Bringing it all together we are starting to become more open-minded to the prospects of a broader weaker trend unfolding” for the dollar, Saravelos said. “Two pillars of America’s role in the world are being fundamentally challenged: the US’s security backstop for Europe and the respect of rules-based free trade.”

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