US Dollar index witnesses biggest drop since early 1970s. Experts blame Donald Trump's one move for USD rate fall

US dollar (USD) continued its slide with just more than a week left before many of President Donald Trump's tariffs are scheduled to kick in. So far, Trump's pullback and pauses on many of his tariffs have helped the US stocks make a stunning recovery from a tariff-induced slide this spring, however the dollar is still slumping. The US dollar index, which measures the US currency against six others, slipped 0.3 per cent to 96.698, its lowest since February 2022. The US dollar index is down more than 10 per cent this year, after logging its biggest first-half dive since the era of free-floating currencies began in the early 1970s on Monday, with analysts pointing out that the weakness was exacerbated by President Trump's critique of the Federal Reserve.

The US dollar weakened on Tuesday, falling the most against the Japanese yen and the Swiss franc, as President Donald Trump's massive tax-cut and spending bill stoked fiscal worries and uncertainty around trade deals weighed on sentiment. The US dollar slipped 0.6 per cent to a new 10-year low and fetched 0.7890 Swiss francs, while the greenback dropped 0.8 per cent to 142.86 Japanese yen and was a hair's breadth away from touching a one-month low against the currency.

Why is US Dollar Down?


"One of the things that underlies the dollar's reserve status and haven value is the idea that monetary policy will be independent," said Michael Brown, senior research strategist at Pepperstone. "And it's pretty clear that in 9 or 10 months' time, whoever is Fed chair, the only reason they're going to be in the job is because they've likely promised President Trump that they are going to deliver (those) sizeable rate cuts," Brown said.

Investors have also started wagering on a quicker pace of monetary policy easing by the Federal Reserve this year ahead of a slew of U.S. economic data this week, headlined by Thursday's nonfarm payrolls report.

Goldman Sachs now expects the Fed to deliver three quarter-point interest rate cuts this year compared with its earlier forecast of a single reduction in December, citing muted tariff effects and labour market weakness.

With the July 9 deadline for Trump's tariffs fast approaching, investors are also keeping an eye on trade deals between the U.S. and its partners although there have not been many agreements so far.

FAQs

Q1. When is deadline for Trump tariffs?
A1. July 9 is scheduled for the deadline for Trump tariffs.

Q2. How is US Dollar preforming today?
A2. The US dollar weakened on Tuesday, falling the most against the Japanese yen and the Swiss franc, as President Donald Trump's massive tax-cut and spending bill stoked fiscal worries and uncertainty around trade deals weighed on sentiment. The US dollar slipped 0.6 per cent to a new 10-year low and fetched 0.7890 Swiss francs, while the greenback dropped 0.8 per cent to 142.86 Japanese yen and was a hair's breadth away from touching a one-month low against the currency.