The US dollar fell on Tuesday against a basket of major rivals amid mounting concerns about the US fiscal situation following Trump’s big tax bill, and with uncertainty about the trade agreements.
Investors are now betting on a faster pace of Fed rate cuts this year, while waiting for crucial US data this week, including the payrolls report on Friday.
That led to a dollar selloff wave, which hit 10-year lows against the Swiss franc at 0.790, with a 0.64% drop against the yen at 143.08, with the yen closing the first half of the year with a 9% surge, its best performance since 2016.
The euro settled near four-year highs at 1.1781, with the common currency up 13.8% in the first half of the year, marking its best ever half-year performance.
Sterling rose 0.2% to $1.3757, hovering near 3-⅕ year highs reached last week, while the dollar index hit February 2022 lows ar 96.6.
Goldman Sachs now expects three Federal Reserve rate cuts this year, compared to previous estimates of just a single rate cut in December, citing the limited impact of tariffs and the softer labor market.
US President Donald Trump’s recent tax bill raised concerns about the financial stability of America, with ongoing uncertainty as well about US trade deals.
Trump continued to pressure the Federal Reserve to cut interest rates, and sent Fed Chair Powell a list of interest rates by global central banks, saying that US rates should be between the 0.5% Japanese rate and the 1.75% Danish rate.
Investors are also monitoring the developments of US trade negotiations with major partners as the July 9 tariff deadline approaches with little progress so far.
