The U.S. dollar is going through a turbulent period. On Wednesday, it hit its lowest level in two weeks, as anxiety grows ahead of the upcoming G7 summit. Traders and investors are increasingly losing confidence in the economic direction of the Trump administration.

Dollar Weakens – Third Consecutive Day of Losses

🔻 Bloomberg Dollar Spot Index fell by 0.4%

🔻 Third straight day in the red

🔻 Dollar weakened against all G10 currencies

It’s not just about G7 expectations — credit rating agency Moody’s downgraded the U.S., and markets reacted negatively. Add to that the growing concerns over tax cut proposals and the soaring national deficit, and the pressure on the dollar continues.

Tensions Among Allies – Japan and South Korea Demand Clarity

Japanese Finance Minister Katsunobu Kato plans to meet with U.S. Treasury Secretary Scott Bessent during the G7 summit to clarify whether Washington is deliberately weakening the dollar or if it's just a byproduct of broader policy moves.

📍 South Korea already held similar talks with the U.S. earlier in May.

Moody’s Downgrade Hits Hard – Dollar Takes a Blow

🔺 GOP tax package: $4.5 trillion

🔻 Estimated revenue loss: $3.8 trillion

🆘 Moody’s: “Long-term unsustainable government debt and rising interest costs”

This has triggered a loss of confidence and capital outflow. The forex market reacted strongly, and the dollar fell against all G10 currencies following the downgrade.

Derivatives Market: Bearish Bets on the Dollar Soar

🔹 Speculators hold short dollar positions worth $16.5 billion

🔹 Bearish sentiment is the most aggressive since September 2024

🔹 “Risk reversal” index dropped to its lowest point since 2011

Just five months ago, markets were bullish on the dollar — now, bets on its continued decline dominate.

Dollar Has Already Lost Over 6% in 2025

Since the beginning of the year, the dollar has shed more than 6%, marking its worst start to a year in nearly two decades.

“The bearish outlook for the dollar remains. Trade deals with China are just a temporary relief,” says Kathy Jones, chief fixed-income strategist at Charles Schwab & Co.

What’s Next? Even Optimists Admit: Without Fiscal Reform, the Dollar Is in Trouble

Some investors hope that a more cautious approach from the Fed might stabilize the market. But even they admit that without swift action on fiscal policy, it won’t be enough.

Summary:

👉 Dollar hits two-week low

👉 Moody’s downgrades U.S. credit rating due to debt

👉 Markets await clarity from G7

👉 Bearish dollar sentiment hits record levels

👉 Without budget reform, 2025 may be a tough year for the greenback



#usd , #BEARISH📉 , #market , #GlobalMarkets , #dollar

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