FX.co ★ Dollar Slides on Fiscal Concerns

The dollar index dipped to approximately 99.5 on Thursday, marking its fourth consecutive day of decline as concerns over fiscal policies dampened sentiment. Investors are increasingly apprehensive about President Trump's proposed budget, which includes comprehensive tax cuts expected to increase the national debt by $3 trillion to $5 trillion. The legislation encountered a political hurdle as several Republican lawmakers from states with high local taxes indicated they would withhold support unless the bill permitted a larger deduction for state and local taxes. Additionally, pressure on the dollar rose following a tepid 20-year bond auction, which signified waning demand for U.S. government debt and fueled worries that both foreign and domestic investors might be shifting away from U.S. assets. On the international front, Japanese Finance Minister Kato mentioned he did not discuss exchange rates with U.S. Treasury Secretary Bessent during the G7 meetings in Canada. Concurrently, there are reports that the U.S. is urging South Korea to implement measures to strengthen the won.