Dollar Hits Two-Week Low Amid Tariff and Fiscal Concerns

The U.S. dollar slipped to a two-week low as renewed concerns over trade tensions and growing fiscal risks unsettled currency markets

The DXY dollar index fell to 99.305, reflecting investor unease amid a mix of geopolitical and domestic policy uncertainties.

According to analysts at Monex Europe, U.S. trade negotiations with key partners including the European Union, China, Japan, and South Korea appear to have stalled, raising fears of a potential escalation in tariff measures. These developments have contributed to a risk-off sentiment, pressuring the dollar despite the currency’s fundamentally positive backdrop.

“While the dollar remains supported by favorable economic indicators, markets have been slow to turn decisively bullish on the currency,” Monex analysts noted in a research report.

Adding to the pressure was the passage of President Trump’s new tax and spending bill in the House of Representatives on Thursday. The legislation is expected to further expand the U.S. budget deficit — a concern that has already been weighing on investor sentiment.

Although the dollar typically benefits from safe-haven flows in times of uncertainty, mounting worries over the long-term fiscal outlook and international trade friction are beginning to erode confidence, at least in the short term.

Market participants will be closely watching any developments in trade talks, as well as signals from the Federal Reserve, for clues on the dollar’s next move.