Global traders are making their strongest bets in more than a decade that the US dollar’s decline is far from over, as political and economic uncertainty in Washington rattles confidence in the currency, according to Bloomberg.
The greenback suffered its sharpest one-day fall in almost a year this week, sinking to its weakest level since early 2022, extending a broader slide that began after President Donald Trump rolled out sweeping tariffs that reignited global trade tensions.
Expectations of interest rate cuts by the Federal Reserve, alongside rising US deficits and debt, have added to the pressure, prompting traders to pile into positions that profit from a weaker dollar.
Market strategists say policy volatility is accelerating the shift, with Citi warning that investors are increasingly repositioning into dollar short trades.
Bloomberg reports that options betting on further dollar losses are now the most expensive since 2011, reflecting heightened demand for protection as volatility jumps to its highest level in months.
While Trump has brushed off concerns, insisting the currency is “doing great,” critics argue a prolonged slide could drive up import costs and inflation while eroding the dollar’s global reserve status.
US Treasury Secretary Scott Bessent has pushed back, saying that over time the administration’s economic strategy will restore confidence and draw capital back into the dollar, even if markets remain unconvinced for now.
Image credit: Jp Valery
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