Dollar Weakens Amid U.S. Debt, Trade, Tax Uncertainties

The U.S. dollar has experienced a decline amid growing investor concerns over fiscal stability and trade uncertainties. President Donald Trump's proposed tax reform bill, expected to add $3–5 trillion to the national debt, has struggled to gain Republican support and heightened worries about the U.S. fiscal outlook, especially following Moody’s downgrade of the U.S. sovereign debt rating. Additionally, ongoing trade tensions and the nearing expiration of tariff reprieves without new agreements with key allies have contributed to cautious market sentiment. Federal Reserve officials have maintained a cautious stance due to economic uncertainties and potential tariff impacts, with some policymakers anticipating interest rate cuts this year. Despite the administration’s optimism that tax cuts will spur growth and revenue, analysts warn that rising debt and fiscal pressures may continue to erode confidence in U.S. assets, potentially leading to further dollar weakness. Global currency markets remain volatile as investors watch for progress in fiscal policy and trade negotiations.