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yesterday

Dollar Slumps to Multi-Year Lows as Tariff Moratorium Ends and Deficit Fears Rise

Expiration of the 90-day tariff moratorium has heightened currency market volatility ahead of a new budget plan that increases U.S. deficits

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Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI), top left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Monday, July 7, 2025.
The Dollar is Sinking. Here's Why
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Overview

  • The U.S. Dollar Index has dropped over 10% in the first half of 2025, marking its steepest six-month fall since 1973 and pushing the currency near multi-year lows.
  • The 90-day pause on President Trump’s reciprocal tariffs expires today, exposing most U.S. trading partners to steeper duties starting August 1 and unsettling markets.
  • Last week’s budget reconciliation bill extends 2017 tax cuts and adds new spending measures, which federal watchdogs warn will further expand the national deficit.
  • Currency options data show investors are bracing for renewed FX volatility driven by political uncertainty and the looming tariff deadline.
  • The euro has climbed roughly 14% against the dollar this year on U.S. policy divergence and expectations of deeper EU fiscal integration, renewing questions about reserve-currency diversification.