Analysis-Dollar under fire again as investors reassess Trump policies, geopolitical risk

Core Viewpoint - The U.S. dollar is experiencing significant downward pressure due to various factors, including the government's desire for a weaker dollar and changing investor sentiment, leading to a reassessment of previous stability assumptions for the currency [1]. Group 1: Dollar Performance - The dollar is on track for its largest three-day decline against a basket of major currencies since April, when previous tariffs led to a substantial selloff in U.S. assets [2]. - Currently, the dollar is underperforming compared to other major currencies such as the euro, sterling, and Swiss franc [3]. Group 2: Contributing Factors - Multiple factors are converging rapidly, including President Trump's aggressive trade policies, threats of tariffs, and tensions with international allies, which are contributing to the dollar's decline [4]. - Despite some backing down on threats, market volatility remains high, and there is fragile sentiment in the bond market, influenced by a selloff in Japanese government debt [5]. Group 3: Federal Reserve and Interest Rates - The Federal Reserve is anticipated to cut interest rates at least twice this year, making the dollar less attractive to investors compared to other currencies where lending rates may rise [6]. - The potential resignation of Fed Chair Jerome Powell, who has resisted calls for faster rate cuts, adds to the uncertainty surrounding the dollar's future [7].