Core Viewpoint - The US dollar has significantly depreciated against other major currencies since early 2025, and this trend may continue due to various factors including monetary policy divergence, questioning of the Federal Reserve's independence, large fiscal deficits, and declining foreign investor demand [1] Group 1: Factors Influencing Dollar Weakness - The Federal Reserve has recently begun to cut interest rates, while other major central banks have either stopped or are nearing the end of their rate-cutting cycles, which narrows the interest rate gap and typically reduces demand for the dollar [1] - Political pressure from President Trump to force the Federal Reserve to cut rates amid high inflation could undermine confidence in the dollar if investors believe the Fed cannot effectively control inflation [1] - Continuous government spending exceeding tax revenue raises concerns about a potential sovereign debt crisis, which could lead to a significant weakening of the dollar [1] Group 2: Investment Implications - Given the potential for further dollar weakness, investors are advised to consider adjusting their portfolios, with a higher allocation to non-US investment-grade bonds and emerging market local currency bonds [1] - Historically, global investors have been willing to hold dollars due to the strength of US corporations and the dollar's status as the world's primary reserve currency; however, the Trump administration's trade and foreign policy stance has weakened foreign investors' willingness to hold US assets, particularly US Treasuries [1]