The U.S. dollar fell sharply against major currencies due to uncertainties surrounding the U.S. economic outlook amidst an escalating trade war. China retaliated against a 145% U.S. tariff with a 125% tariff on American goods. Consequently, the dollar hit a ten-year low against the Swiss franc and a three-year low against the euro, reaching 88 cents per euro. Analysts attribute this decline to repatriation trades by European investors selling USD-denominated assets. Rising tariffs pose risks to U.S. economic growth, and some experts suggest de-dollarization as a factor in the dollar’s weakness. The euro has become a recipient of dollar outflows, with some forecasts predicting EUR-USD could reach 1.20 by 2026. Unusually, the yield on 10-year U.S. Treasuries rose to 4.46%, contrasting with the dollar’s decline, reflecting waning confidence in dollar assets. Meanwhile, German government bonds are gaining favor as safe-haven assets. — new from Morningstar
