Federer usurped Nadal as world No 1 in February by winning the Rotterdam Open.
However, just over a month on, the 36-year-old has dropped down a spot.
Federer was expected to win at Indian Wells and scoop the Miami Open title.
But the veteran instead slumped to shock defeats to Juan Martin Del Potro and Thanasi Kokkinakis respectively.
However, Rafael Nadal is not expected to sit atop of the tennis world for long.
The Spaniard must showcase his brilliant and best form to have any chance of retaining his ranking.
Federer will not be playing the clay-court events this season, for the second year in a row.
Nadal, meanwhile, won titles in Monte Carlo, Barcelona and Madrid last year.
He also won the French Open for a 10th time and has his sights set on triumph No 11 this year.
However, if he does not win the same tournaments as last year, Nadal will lose points.
Nadal must win the Monte Carlo Masters when it kicks off on April 15.
And failure to do so will see Federer make a swift return to the summit.
Meanwhile, Federer said last month he deserved to lose the No 1 ranking after his Miami Open nightmare.
“I deserve it after this match,” he said in the immediate aftermath of his Kokkinakis shocker.
“That’s how I feel. Just so bad.”
