U.S. Dollar on 5th day Losing Streak
The US Dollar Index has dropped to about 99.37, falling for 5 days. The greenback is bearish amid an intensifying trade war between the United States and China.
Donald Trump declared last week that all of its trading partners, except China, would not be subject to reciprocal tariffs for 90 days. The situation deteriorated after Trump increased reciprocal levies on China to 125 percent for imposing substantial counter-tariffs on the US.
President Trump’s trade offensive has caused a crisis of confidence in dollar-denominated assets that is so serious that it jeopardizes the fundamental underpinnings of American financial hegemony. The intricacies and insights of this unraveling reveal how tariff brinksmanship has evolved into a full-fledged currency crisis with consequences that extend well beyond trade flows.
As currency markets processed the ramifications of Trump’s so-called Liberation Day tariffs a broad 10 percent baseline levy on all imports interspersed with punitive rates exceeding 100 percent for targeted nations the dollar’s decline gathered alarming momentum in April.
Traditional models can’t predict the violent market response, as investors staged an unprecedented coordinated flight from US stocks, Treasuries, and the currency itself rather than transferring capital to conventional dollar safe havens.
Countries were greatly relieved by the 90-day reciprocal tariff pause, which caused global stocks, including US stocks, to rise sharply.
The US dollar is still under pressure as investors believe that Trump’s tit-for-tat tariff war with China and his yes-or-no stance on import taxes will reduce the currency’s structural appeal.
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