The US dollar witnessed a sharp decline on Monday, as it fell to its lowest level against the euro about four years, amid fears of the increasing deficit of the American budget and the uncertainty about commercial agreements with major countries.
Divisions within the Republican Party on Trump’s plan
Republicans in the Senate are trying to pass President Donald Trump’s project to reduce taxes and increase spending, despite the differences within the party regarding the impact of the potential plan on public debt, which may reach $ 3.3 trillion.
Great losses to the dollar in front of the major currencies
The dollar fell by 0.63%against the Swiss franc to 0.7935, recording a monthly decrease by 3.6%, and an annual loss of approximately 12.5%. As for the euro, it has risen to $ 1.1780, which is its highest level since September 2021, and is heading to make monthly gains of 3.8% and annual by 14%.
Analysts: The dollar is in a clear and clear path
“The greatest interest is now on the huge draft law. The dollar is moving in a declining direction, and the winners so far this year are the Swedish Crohnah, the Swiss franc, and the euro, whose value has improved after the European Union announced a huge spending plan,” said Amo Sahuta of Klarity FX.
The European Union is open to a trade agreement with Washington
Bloomberg reported that the European Union is ready to accept a trade agreement with the United States that includes the imposition of a 10% uniform customs tariff on many of its exports. On the other hand, US Treasury Secretary Scott Besent warned that countries may face high customs duties on July 9, even if they negotiate a good intention.
Signs of a breakthrough with China and confusion with Canada
Besent explained last week that Washington and Beijing have resolved some issues related to the supply of rare minerals and magnets. However, instability returned with Trump’s announcement to change his position on Canada. In the same context, Canada has stopped its plans to impose a new digital tax targeting American technology companies, to enhance the chances of success of commercial negotiations.
The performance of markets and other currencies
The S& P 500 and NASDAQ index ended Monday’s session at record heights, in the best quarter of them for more than a year, while Dow Jones rose by 0.6%. The dollar fell by 0.36% against the Japanese yen to reach 144.45, while the Canadian dollar rose by 0.41% to 1.353 against the US dollar, achieving its fifth monthly gains respectively.
The worst year of the dollar since the 1970s
The dollar index, which measures the performance of the currency against a basket of currencies, decreased by 0.35% to 96.86, on its way to register a loss for the sixth consecutive month, which is the worst annual performance since the 1970s.
