The dollar index fell by about 0.7% to 100.1 on Monday, retreating further from the one-month highs reached last week, as growing concerns over the US fiscal outlook triggered a shift away from dollar-denominated assets. On Friday, Moody's downgraded the US credit rating from Aaa to Aa1, citing rising government debt and a widening budget deficit.
Fiscal concerns were further exacerbated by the approval of President Trump's tax-cut legislation by a key congressional committee on Sunday. The bill includes hundreds of billions of dollars in new tax cuts without corresponding spending offsets.
Despite criticism, the Trump administration argues the tax cuts will spur economic growth, boost revenues, and ultimately help narrow the deficit.
On the monetary policy front, markets continue to price in two rate cuts by the Fed this year, with reductions anticipated in September and December. The dollar weakened broadly, with the sharpest declines recorded against the euro and the British pound.
Source: Trading Economics
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