Trade Uncertainty and Recession Fears Weigh on the U.S. Dollar

By Samir El Khoury, ACSI, ACICMP?

After reaching its highest level this year on January 13, 2025, at 110.17 points, the U.S. Dollar Index (DXY), which measures the dollar’s performance against a basket of six major currencies, has declined to 103.22 points two days ago, marking its lowest level since October 16, 2024. This represents a drop of approximately 6%. Currently, the index is trading around 103.60 points and has fallen by about 4% since the beginning of the year.

Reasons Behind the Decline in the U.S. Dollar Index:

• Falling U.S. Treasury Yields: The yield on the 2-year Treasury bond, which is highly sensitive to Federal Reserve policy, dropped to 3.829% two days ago, its lowest level since October 4, 2024. Meanwhile, the yield on the 10-year Treasury bond, which is more affected by U.S. fiscal policy, fell to 4.108%, its lowest level since October 21, 2024.

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Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.