The U.S. dollar dropped to its lowest level since 2023 on Friday after renewed tariff threats from President Donald Trump fueled market anxiety and added to concerns over the nation’s fiscal health.
The Bloomberg Dollar Spot Index fell as much as 0.8% on the day, marking a more-than-7% decline since January. The downturn came after Trump threatened new tariffs on the European Union and Apple Inc., reviving fears of intensified trade conflict.
“A large increase in tariffs on U.S. imports from the EU once again brings forward the potential for recession risks in the U.S. alongside higher policy and economic uncertainty,” said Aroop Chatterjee, a strategist at Wells Fargo.
The dollar’s weakness spurred broad gains among Group-of-10 currencies. The New Zealand and Australian dollars led the advance, with seven currencies appreciating by 1% or more. The Canadian dollar strengthened to 1.3712 per U.S. dollar—its strongest since October—while the Swiss franc rose to 0.8206, a two-week high.
Treasury Secretary Scott Bessent downplayed concerns in an appearance on Bloomberg Television’s Wall Street Week, stating that several major trade deals could be finalized soon. “I wouldn’t necessarily call the dollar weak,” Bessent said, attributing the shift more to foreign currency strength than U.S. weakness.
Meanwhile, Commodity Futures Trading Commission data from May 13 revealed that speculative traders are holding about $16.5 billion in short dollar positions—the highest since September.
Uncertainty around Trump’s proposed tax bill and ongoing debt ceiling negotiations has also contributed to investor caution. “The jitters with respect to the U.S. budget suggest that the market is continuing to re-think the U.S. exceptionalism trade,” said Jane Foley, strategist at Rabobank. “Whether it be budget, inflation, or growth concerns, investors are more wary of U.S. assets, and that is continuing to weigh on the dollar.”
According to Yahoo Finance, the continued slide reflects not just short-term political risk, but a broader reassessment of the dollar’s strength in the global economy.
