Dollar Weakens Amid Fed Rate Cut Signals and Political Uncertainty

The U.S. dollar has plummeted 9.6% this year against major currencies, with analysts forecasting further declines. The Federal Reserve's anticipated rate cuts—expected to begin with a quarter-point reduction in September—are diminishing the appeal of dollar-denominated assets. "As we approach the Fed's cut while other central banks pause, pressure on the dollar intensifies," says Marc Chandler of Bannockburn Global Forex, predicting an additional 5% drop this year.

Political tensions compound the currency's woes. Fed Chair Jerome Powell's term expires next May, and the WHITE House has already floated potential successors. President Trump's public pressure on Powell to slash rates raises concerns about the central bank's independence, further unsettling markets.