The U.S. dollar index saw a significant decline on Thursday, falling below the 97.8 mark to record its lowest level since 2022, affected by a combination of renewed trade tensions and rising geopolitical risks.
A key development was President Donald Trump’s announcement of his intention to send official letters to major trading partners within two weeks, containing threats of unilateral tariff measures aimed at pressuring countries into signing new trade agreements. This move comes as the current 90-day truce on retaliatory tariffs is set to expire soon, fueling widespread market concerns about a potential return of the trade war.
On the geopolitical front, tensions escalated further after Iran threatened to target U.S. military bases should nuclear talks collapse, adding a layer of uncertainty to the global landscape.
Economically, weaker-than-expected U.S. inflation data released on Wednesday eroded market confidence in the dollar and increased investor expectations that the Federal Reserve may cut interest rates twice this year.
Under this mix of pressures, the dollar recorded its sharpest losses against the euro, Swiss franc, and Japanese yen — reflecting a shift by investors toward safe-haven currencies amid growing risk.
This decline brings back questions about the future of U.S. monetary policy and whether the dollar can maintain its dominance in a world undergoing rapid change.
