The US Dollar (USD) continues to face selling pressure, with the US Dollar Index (DXY) dropping as low as 96.38, its weakest level since February 2022, during early trading on Tuesday (01/07).

However, the greenback rallied during the American session, with the DXY last seen trading around 96.85, supported by better-than-expected US economic data. A stronger ISM Manufacturing PMI and a strong JOLTS jobs report helped ease some of the bearish momentum, although the overall sentiment remains cautious amid ongoing concerns over US fiscal stability, tariff uncertainty, and increasing political pressure on the Federal Reserve (Fed).

The DXY has now ended its last six straight months in the red, down more than 10% in the first half of 2025 — its worst first-half performance since currencies began floating in 1973, with the second quarter alone marking the sharpest quarterly decline since Q4 2022. The US dollar weakened against all major G10 currencies during the period as investors sold dollar-denominated assets.

Several key factors have driven the US dollar's ​​sharp decline over the past quarter, but the greenback's weakness has been driven primarily by US President Donald Trump's unpredictable trade and economic policies. His massive tax and spending proposal, known as the "One Big Beautiful Bill," has unnerved investors. The bill, which includes permanent tax cuts and a major spending overhaul, has raised concerns about fiscal instability and could add more than $3.3 trillion to the national debt.

Adding to the pressure, with a July 9 deadline looming, Trump's push for broad tariffs adds to uncertainty around global trade and economic policy. With less than a week to go, only an interim deal with the UK and a de-escalation with China have been reached, while talks with other major trading partners remain stalled.

The US administration also appears to be abandoning its idea of ​​"90 trade deals in 90 days". Instead of securing a comprehensive trade deal, the focus now appears to be shifting to an interim deal, while maintaining the 10% import tax that will ultimately be passed on to US consumers. (alg)

Source: FXstree