The US Dollar continues its decline into Q3, losing ground against all G10 currencies after a dismal first half of the year, with the Dollar Spot Index dropping over 10%, its worst first-half performance since 1973. Contributing factors include fiscal uncertainty over the Administration’s proposed spending bill, concerns about the rising US debt ceiling, reduced foreign investment in US government debt, and a dovish shift in the Federal Reserve’s outlook amid speculation about leadership changes. International trade negotiations and potential tariffs also weigh on the Dollar. Meanwhile, the Euro strengthens with nine straight days of gains, supported by steady inflation and improving economic data, particularly from Germany, while the Japanese Yen leads the G10 currencies, buoyed by optimistic manufacturing sentiment and strong bond auction demand, signaling potential future rate hikes from the Bank of Japan.
