The dollar is in a continuous decline, showing significant reductions amid the expectations of the G7 meeting and economic troubles in the US.
Dollar Weakens
On Wednesday, the Bloomberg Dollar Spot Index dropped by 0.4%, marking its third consecutive day of losses and hitting a two-week low. Traders around the world are watching the G7 meeting this week, anticipating signals of potential support for a weaker dollar policy from President Donald Trump’s administration.
Impact of Budget and Tax Cuts
Lawmakers are debating a $4.5 trillion tax cut package that Republicans want to spread over a decade. The current draft would already lead to $3.8 trillion in revenue losses, raising concerns on Wall Street about the growing US budget deficit. Moody's Ratings stripped the US of its top credit grade last week, citing long-term growth in government debt.
Growing Pessimism Among Traders
Speculative traders are now holding $16.5 billion worth of short positions against the dollar, nearing the most aggressive bearish stance since September 2024. Since the start of 2025, the dollar has lost over 6% of its value, the worst start to a year in nearly 20 years. Despite an announced temporary truce between the US and China, hopes for a dollar recovery remain doubtful.
The dollar's decline continues to raise alarm across global markets. Given the current economic realities and tax issues in the US, the situation requires close monitoring.
