The dollar index extended earlier losses to dip below the 99.4 mark on Thursday, paring gains from the previous session's rebound and hovering near the three-year lows of 98 seen earlier this week.
US dollar index reapproaches three-year low
The decline came as persistent skepticism over the prospects of a US-China trade deal continued to undermine confidence in the narrative of US economic exceptionalism. Heightening tensions, Chinese officials stated unequivocally that Beijing would not enter into any substantive trade negotiations until Washington rolls back existing tariffs on Chinese goods. This hardened stance added fresh uncertainty to an already protracted trade standoff, casting further doubt on the likelihood of a near-term resolution.
Dollar faced added pressure
As concerns deepened, the dollar faced added pressure alongside broader US financial markets. Equities stumbled and Treasury yields slipped, reflecting investor anxiety about the longer-term implications for global growth and US economic stability. The lack of clarity surrounding trade policy compounded fears about the safety and attractiveness of US assets. Compounding the unease, reports emerged that President Trump had recently considered removing Federal Reserve Chair Jerome Powell—a move that would sharply undermine the central bank’s independence. Although Trump later walked back the threat, affirming that Powell would remain in his position, the episode rattled markets, prompting a flight to safety.
Investment funds reacted by shifting capital toward gold and foreign currencies, signaling a broader retreat from dollar-denominated assets amid a murky geopolitical and monetary outlook. As such, the greenback’s decline reflects both external pressures from international policy disputes and internal political dynamics that continue to cloud the near-term trajectory of US financial leadership.
