He US dollar Continue losing land in international markets. This Thursday, in the midst of fears generated by the comings and turns of the tariff war, the US currency It sinks its minimum value in three years.
As we contradate, the euro reached 1.16 dollarsa level that was not registered since November 2021, consolidating a tendency to strengthen the European common currency against an American currency that accumulates pressures on different fronts.
Donald Trump warned in the last hours that in two weeks it will send letters to the different countries in which it will establish the new duty that will apply unilaterally. That, added to the tension in the Middle East, reinforced the climate of Global risk aversion.
In that marked the dollar indexwhich compares the American currency with a basket of six leading coins, collapsed to drilling 98 points, a level not seen from February 2022.
From INGanalysts claim that the euro has been “the great beneficiary of defolarization”, in a context where structural changes are evidenced in the allocation of global assets. “Perhaps we are seeing the delayed impact of direct sales of US assets or the increase in coverage in institutional portfolios,” they explained.
The pair EUR/USD currently quote above what would justify the differentials of short -term interest rates, which reinforces the perception of a underlying weakness in the dollarbeyond the technical component.
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Tense negotiations and confusing signs from Washington
One of the reasons that weighs on the American currency is the uncertainty that surrounds the commercial negotiations headed by the Trump administration. Although a Preliminary agreement with Chinathe market has not reacted with enthusiasm. “The details are vague and President Trump already warned that he will send letters with commercial conditions of ‘Take or leave it to about 20 countries,” said Ing analysts.
This Keep the possibility of a new tariff increase on July 9 alivea perspective that operators consider negative for the dollar.
Contained inflation, high rates … for now
He Inflation fact in the US Mayo surprised down, both in its general and the underlying rate. However, several analysts believe that, combined with a still solid labor market, this reinforces the cautious position of the Federal Reservewhich does not seem willing to reduce rates in the short term. This waiting policy, although it supports the dollar immediately, also feeds the perception of stagnation.
“The dollar is very pressured compared to type differentials,” they explain in ing. “Without a new rate cut, it is difficult to see a larger fall, but there is also no impulse to rebound.”
The geopolitical factor: tension in the Middle East
To this are added the growing Tensions in the Middle Eastwith speculation about a possible attack by Israel to Iranian nuclear facilities. The United States issued partial evacuation alerts of its embassy in Baghdad, while the price of oil rises In the middle of the climate of uncertainty.
In this scenario, some analysts consider that the dollar could benefit as an active refuge, due to the US energy advantage, although they warn that the Yen and the Swiss Franco They are also capturing defensive flows.
A structural change?
From Swissquote BankIpek Ozkardeskaya analyst indicated that Dollar shows a significant fall after the publication of the CPIadded to concerns for tariffs and debt. In turn, Robert GilholyAberdeen Investments economist, although he does not believe that the status of the dollar as a reserve currency is in immediate danger, warns that an accumulation of policy errors could put it at risk.
For its part, from the European Central Bankthe member of the Executive Committee Isabel Schnabel said that the monetary policy cycle in the euro zone “is approaching its end”, but that current interest rates are already in a “good place”, which has reinforced the stability of the euro.
In short, the weakening of the dollar is explained by A combination of commercial uncertainty, geopolitical tensions, mixed signals from the Federal Reserve and a change in global flow dynamics. Meanwhile, the euro and other currencies advance land, in an increasingly volatile environment for strong currencies.
Source: Ambito
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