US Dollar Falls Amid Trade Deal Progress, Fed Pressure, Deficit Concerns

The U.S. dollar has been experiencing a significant decline, reaching nearly a four-year low against the euro, driven by concerns over the escalating U.S. government deficit and trade uncertainties under President Donald Trump's administration. Market reactions have been influenced by Senate Republicans advancing Trump's expansive tax-cut and spending agenda, which threatens to add over $3 trillion to the national debt, fueling doubts about the dollar’s strength. Meanwhile, trade negotiations show mixed progress, with the U.S. nearing deals with China and Canada, including agreements to expedite rare earth mineral shipments and the removal of Canada's digital service tax, though tensions remain as Trump threatens to end talks in response to trade measures. President Trump has also publicly pressured the Federal Reserve to lower interest rates to as low as 1%, criticizing Fed Chair Jerome Powell and suggesting a replacement with a more dovish policymaker, raising concerns about the central bank's independence and the dollar’s medium-term outlook. Additionally, Trump opposes the Federal Reserve’s proposed digital dollar (CBDC), viewing it as a tool for excessive control, while favoring private stablecoins as a means to preserve U.S. monetary dominance in the digital era without compromising the existing monetary system's flexibility and power. This stance reflects a strategic effort to maintain the dollar's global influence by balancing technological innovation with traditional monetary strengths.