Yeliz Akmaca 
US Dollar Index Sees Sharp Decline
The US Dollar Index (DXY) fell 10% from its 2025 peak, dropping to 99.40. The decline accelerated with Donald Trump’s inauguration. Tariffs imposed on allied countries like Canada and Mexico sparked market concerns. As a result, reciprocal tariffs announced on “Independence Day” intensified selling pressure. However, Moody’s downgraded the US credit rating to AA1 on Friday, stripping it of its last Triple-A rating. Moody’s joined S&P Global in 2011 and Fitch in 2023 in lowering the rating.
The House of Representatives passed the “Big Beautiful Bill” with a 215-214 vote. The bill extends the 2017 tax cuts, exempts overtime and tips from taxes, and removes millions from programs like Medicare. The Congressional Budget Office (CBO) estimates the bill will add $3.8 trillion to the deficit over 10 years, increasing the US’s $36.2 trillion debt. The budget deficit is expected to reach 7% of GDP. Consequently, Trump’s tariffs and fiscal health concerns are pressuring the USD.
DXY Technical Analysis and Market Dynamics
In the DXY’s daily chart, bullish momentum has weakened. The RSI’s decline has slowed. Support is at 99.10, with resistances at 100 (21 DMA), 100.80 (23.6% Fibonacci), and 101.35 (50 DMA). Without a new trigger, the downward pace may slow. However, investors remain cautious due to fiscal and tariff uncertainties. The Senate’s approval process for the bill will influence the USD’s direction.
Economic data has had limited impact on the DXY. Federal Reserve officials Susan Collins and Raphael Bostic indicated no rush to cut rates. Tuesday’s Conference Board consumer confidence report is critical. Recent data showed declining confidence due to labor market and inflation concerns. Still, markets are focused on debt growth and tariff effects.
Trump’s tariffs have shaken global investors’ confidence in US assets. Moody’s downgrade heightened debt sustainability concerns. As a result, gold prices surged 23% due to safe-haven demand. The EUR strengthened against the USD, reaching 1.138. Investors are questioning US fiscal policies and debt burdens. Fears that tariffs could slow economic growth are fueling the DXY’s decline. Markets are watching the Senate’s stance on the bill and the Federal Reserve’s rate decisions.
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