Reuters experts warn of further dollar decline

Experts interviewed by Reuters expect further weakening of the US dollar due to Donald Trump's unpredictable tariff policies and their uncertain impact on the country's economy. A temporary trade truce between the United States and China briefly supported the global reserve currency, but the dollar declined again after Moody's downgraded the US credit rating. Investors are now questioning the "exceptionalism" of the United States, the agency reports.

The dollar index has fallen 10.6% from its January highs, showing one of the sharpest retreats in a three-month period. Traders remain bearish, as evidenced by the net short position on the American currency rising to $17.32 billion. This is close to the record set by the Commodity Futures Trading Commission (CFTC) in July 2023.

The dollar’s bearish trend is partly due to overvaluation. According to Reuters, in January it was 22% above the 20-year average. Despite the recent 10.6% decline, the dollar index remains roughly 10% higher than the average over the past two decades.