Dollar hits six-week low as trade tensions and debt fears weigh on U.S. Economy
- The U.S. dollar fell to a six-week low as trade tensions and tariffs under Trump’s policies continue to hurt the economy.
- Investors are growing more cautious due to weak manufacturing data, rising federal debt, and uncertainty around trade talks.
- The euro hovered around $1.1446 after briefly climbing to $1.1454, its strongest in six weeks.
On Tuesday, the dollar fell to its weakest point in six weeks after new signs showed Trump’s trade policies were hurting the U.S. economy.
On Tuesday, the dollar index hardly changed after falling to 98.58, its weakest level since late April. Compared to the Japanese yen, the dollar was at 142.71, which is nearly a one-week low. The euro hovered around $1.1446 after briefly climbing to $1.1454, its strongest in six weeks.
Data on factory production and job growth, due later this week, may show the extent of the damage the trade war is causing. Even though global stock markets have bounced back, the dollar itself has continued to weaken.
On Wednesday, U.S. duties on imported steel and aluminum will double to 50%. The day also marks the deadline for other nations to submit their best proposals in ongoing trade discussions with Washington.
Rodrigo Catril, a senior foreign-exchange strategist at National Australia Bank, said, “What this whole dynamic is basically saying is trade tensions are not really improving in that regard, and we’ve seen the dollar getting hammered widely.” He added that the Australian and New Zealand dollars have held up well.
New Zealand’s currency gained 0.1 percent, rising to $0.6045, a fresh peak for 2025. The Australian dollar held steady at $0.64951.
Investors are now looking ahead to the European Central Bank’s meeting later in the week, when the bank will announce its decision on interest rates and offer guidance for the months ahead.
U.S. debt worries trigger “Sell America” trend
On Monday, the dollar index fell 0.8 percent after data showed U.S. manufacturing shrank for the third straight month in May, with tariff-related delays slowing supplier delivery times. Last week, the dollar briefly recovered, rising 0.3% when talks with the European Union resumed.
In addition, the U.S. trade court blocked most of Trump’s proposed tariffs. However, an appeals court overturned that tariff block a day later, and the administration said it would look for other ways to enforce the tariffs if necessary.
Concerns over the U.S. government’s finances have also weighed on investor sentiment, leading to a broader “sell America” trend that has pushed down stocks and Treasury bonds in recent months.
If you're reading this, you’re already ahead. Stay there with our newsletter.
Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.
Noor Bazmi
Noor Bazmi contributes to Cryptopolitan news team equipped with a Media Studies degree. Noor covers news on blockchain, cryptocurrency, artificial intelligence, Big Tech, EV markets, global economics, and government policy shifts. She is taking studies in marketing to connect with global audiences.
