Dollar’s Decade-Long Low: Trade Wars and Debt Drive Currency Down

The US dollar has hit a decade-long low, experiencing its worst first half in over 50 years, with a 10.8% decline against a basket of currencies. This significant drop is driven by Donald Trump’s trade wars and mounting concerns over the US national debt, which together are pushing the currency down and eroding its safe-haven appeal.
The euro has gained 5% against the struggling dollar, as noted by Unicredit. Rising expectations of US interest rate cuts, pushed by Trump’s critiques of the Federal Reserve, have further hurt the dollar. Despite this, the S&P 500 of US stocks remarkably rebounded to a record high by the end of June, suggesting that while the currency faces headwinds, other segments of the market are finding strength, particularly in technology and AI, and the anticipation of policy adjustments.