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Dollar Slide Persists Into Second Half on Fed Outlook and Fiscal Uncertainty

Central banks boosting gold purchases reflect broad expectations that policy swings and looming rate cuts will sustain dollar weakness

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Overview

  • The U.S. dollar plunged over 10% against major currencies in the first half of 2025, marking its worst midyear performance since 1973.
  • Policy volatility around tariffs and U.S. deficits approaching $2 trillion this year have fueled pressure on the greenback.
  • Market prices now incorporate anticipated Federal Reserve interest rate cuts later in 2025, adding to downward momentum.
  • World Gold Council figures show central banks are acquiring roughly 24 tons of gold per month to diversify reserves away from dollar assets.
  • Macro strategists at firms such as TS Lombard are maintaining short dollar positions, betting on further declines.