The US dollar faces mounting pressure amid escalating trade tensions and tariff impositions, which have disrupted global trade and created uncertainty among investors. Analysts point to the US’s large fiscal deficit and rising public debt as key factors undermining confidence in Treasury bonds and the dollar’s status as a global reserve currency. A recent OECD report downgraded US growth forecasts due to fears of a prolonged trade war, exacerbated by tax cuts and significant spending. Major financial institutions, including Morgan Stanley and JPMorgan Chase, predict further declines in the dollar, with estimates of up to a 9% drop over the next year. Michel Salibi, Chief Market Analyst at FXPro, highlighted concerns over the $36 trillion national debt and its annual interest costs nearing $1 trillion. He noted that safe-haven assets like gold, the Japanese yen, and the Swiss franc are gaining favor amid volatility. The Federal Reserve’s cautious stance on monetary policy adds to market uncertainty, with speculations of potential interest rate cuts in late 2025. Until structural reforms address these challenges, downward pressures on the dollar are likely to persist.
— new from Sky News Arabia
