U.S. Dollar's Dramatic Decline Reflects Fiscal and Trade Uncertainty

The U.S. dollar hit its weakest point against the euro since 2021, spurred by President Trump's spending bill and ongoing trade uncertainties. Investors are expecting more monetary easing by the Federal Reserve, contributing to the dollar's drop. The euro and yen have gained considerably, indicating global currency volatility.

The U.S. dollar has sunk to its lowest level against the euro since September 2021, as President Donald Trump's spending bill raises fiscal concerns and trade uncertainties loom large. The euro surged to a near four-year high at $1.179, while the dollar index slipped to its lowest since February 2022.

Anticipation of a faster monetary easing pace by the Federal Reserve contributes to this dollar slide, investors keenly awaiting this week's U.S. economic data. Sterling held steady and the Japanese yen strengthened, reflecting an increasingly volatile currency landscape.

The fiscal concerns emerged from the U.S. Senate's struggle with Trump's tax-cut and spending bill, which threatens a $3.3 trillion addition to national debt. Treasury auction demand has weakened, and Trump's pressures on the Fed fuel market uncertainties. Investors are focused on upcoming comments from Fed Chair Powell at the European Central Bank forum in Portugal.

(With inputs from agencies.)