Dollar’s Wobble: Trade War Fears and Market Instability
The dollar’s recent performance paints a picture of volatility, influenced by factors ranging from White House policy to looming trade disputes. The WSJ Dollar Index,a key indicator of the dollar’s strength against other currencies,closed May at 95.83, marking a 0.38% decline for the month and a substantial 6.74% drop over the preceding five months.
This five-month slide represents the most notable downturn since March 2023. Furthermore, White House policies have reportedly pushed the U.S. currency to its lowest level against the Swedish krona in 40 months.
Brief Recovery Amidst Uncertainty
Despite the overall downward trend, the dollar experienced a slight rebound on Friday, gaining 0.1%. This upward tick contributed to a 0.49% increase over the past week, suggesting a potential, albeit fragile, recovery.
Trade War Shadows Loom Large
Market sentiment remains far from stable, with analysts pointing to ongoing fluctuations. The U.S. dollar continues to exhibit major fluctuations, but on Friday the currency seems to get a certain lift upwards. In this situation it is indeed not surprising that the market is moving jerk,
according to analyst Christopher Lewis.
concerns surrounding potential new tariffs, particularly those associated with former President Trump, are casting a long shadow.Bank of America (BofA) analysts warn that U.S.tariffs could disproportionately harm the United States due to its greater reliance on foreign trade compared to other nations.
The reason is that the United States is more dependent on foreign trade than the outside world.
Bank of America Analysts
BofA also cautions that tariffs could trigger retaliatory measures and dampen investment, potentially leading to weaker U.S.economic data and further pressure on the dollar.
Expert Predictions
Adding to the uncertainty, some financial institutions are forecasting a continued weakening of the dollar. one major bank predicts the dollar will fall below 9 Swedish kronor (SEK) this year.
