US Dollar Hits Multi-Year Low Amid Fiscal & Tariff Fears

The US Dollar declines amid rising concerns over fiscal challenges and escalating tariff risks.

The US Dollar (USD) remains under heavy selling pressure, with the US Dollar Index (DXY) hovering near 96.45 — its lowest level since February 2022 — as it extends its losing streak to nine consecutive sessions. Mounting worries over fiscal instability, escalating tariff tensions, and growing political influence on the Federal Reserve are keeping the Greenback subdued.

The DXY has now posted losses for six straight months, falling more than 10% in the first half of 2025, marking its worst first-half performance since the advent of floating exchange rates in 1973. The second quarter alone saw the steepest quarterly drop since Q4 2022. During this period, the USD weakened broadly against all major G10 currencies as investors trimmed exposure to dollar-linked assets.

Several factors have contributed to the USD’s sharp slide in recent months, but much of the pressure stems from the unpredictable economic and trade policies under President Donald Trump. His ambitious “One Big Beautiful Bill” — a sweeping tax-and-spending plan proposing permanent tax cuts and deep budget overhauls — has raised alarm over fiscal sustainability. Analysts warn it could add over $3.3 trillion to the national debt, further rattling market confidence.

Meanwhile, Trump’s aggressive push for new tariffs ahead of the self-imposed July 9 deadline is compounding uncertainty around global trade. Despite a preliminary deal with the UK and signs of easing tensions with China, progress with other key partners remains stalled. The administration also appears to be shifting away from its bold “90 trade deals in 90 days” strategy, favoring temporary agreements while maintaining a 10% import tax—a policy widely seen as inflationary for U.S. consumers.