The US dollar experienced its worst year in eight, declining 9% due to expectations of Fed rate cuts and global economic shifts, with most analysts predicting further weakening in 2026 as other major economies gain momentum and central bank policies diverge. Near-term rebounds may occur due to AI enthusiasm and US growth, but the overall trend points to a weaker dollar driven by global growth convergence and monetary policy divergence.
Bitcoin reached a new all-time high of over $125,000 amid a macroeconomic shift where safe-haven assets like gold and precious metals are also surging, while the US dollar is on track for its worst year since 1973 due to inflation, interest rate cuts, and political instability, signaling a significant change in monetary policy and investor behavior.
The U.S. dollar stabilizes at four-year lows ahead of the Federal Reserve's decision on interest rates, with markets anticipating a 25 basis point cut amid strong retail sales and GDP growth, while global markets react to U.S.-China trade developments, UK-US tech ties, and currency movements.
US Treasuries fell and the dollar weakened as President Trump sought to oust Fed Governor Lisa Cook, raising concerns about the independence of the Federal Reserve and potential impacts on inflation and interest rates, amid broader political and fiscal tensions.
The USD has risen slightly following US strikes on Iran's nuclear sites, with indicative forex rates showing modest movements amid geopolitical tensions. Traders are advised to remain cautious as the situation develops.
Early Monday morning forex markets show the USD slightly stronger following weekend news of a shooting at a Trump rally, causing some initial market volatility. Market liquidity remains thin until more Asian markets open.
The article argues that stablecoins, digital currencies pegged to stable assets like the USD, are crucial for maintaining the US dollar's global dominance and national security. It emphasizes the need for US regulators to recognize stablecoins as a defense technology and to establish clear rules, such as trademarking the USD, to protect and proliferate the digital dollar. The author highlights the importance of stablecoin founders in this mission and calls for regulatory support to ensure the stability and security of the US financial system in the digital age.
The Japanese yen has dropped to a 34-year low against the USD, experiencing a 32% decline since 2021 and a 50% drop since 2012 due to Japan's aggressive monetary policies. The Bank of Japan's massive money printing and debt purchasing have led to the destruction of the currency, despite recent small steps to move away from these policies. The yen's collapse serves as a cautionary tale about the consequences of prolonged reckless monetary measures.
China is maintaining its defense of the yuan against potential weakness, as the People's Bank of China keeps the daily reference rate for the currency largely unchanged, signaling the importance of yuan stability amid pressure from a strong dollar and negative investor sentiment.
The US March ISM manufacturing data came in at 50.3, surpassing the expected 48.4, with notable improvements in prices paid, employment, new orders, inventories, and production. The report reflects strong demand and a robust order pipeline, with some sectors anticipating growth in the second quarter despite supply chain challenges. The dollar strengthened in response to the positive report, and US 10-year yields also rose, indicating market optimism.
Japan's vice finance minister for international affairs, Masato Kanda, has warned against speculative moves in the foreign exchange market as the yen remains weak against the dollar, trading around 150-151 per dollar since the Bank of Japan's recent interest rate hike. Kanda emphasized that the yen's current weakening is not in line with fundamentals and is driven by speculation, stating that appropriate action will be taken against excessive fluctuations.
The US Consumer Price Index (CPI) data for February is expected to show a 3.1% YoY increase, with the Core CPI inflation rate forecasted to edge lower to 3.7%. This report could impact the timing of the Federal Reserve's policy pivot, potentially affecting the US Dollar (USD) and currency pairs like EUR/USD. Markets are currently pricing in a 75% probability of a Fed rate cut in June, and the upcoming CPI figures could influence market positioning. The Fed aims to maintain price stability and maximum employment, and the inflation data will be closely watched as the central bank considers its policy decisions.
Former President Donald Trump spoke favorably about bitcoin and cryptocurrencies, stating that he sees a lot of use for them and is not sure if he would want to take that away. His comments helped push bitcoin to a fresh record high above $72,000, with other cryptocurrencies also seeing price increases. While Trump emphasized the importance of maintaining the U.S. dollar's status as the global reserve currency, he acknowledged the growing significance of cryptocurrency. This marks a shift from his previous negative comments about bitcoin, and comes as the cryptocurrency surged past $70,000 following news of U.K. regulators allowing professional investors to trade exchange-traded notes linked to bitcoin.
The upcoming week in the financial markets is expected to be influenced by key inflation data releases, including the US PCE data for January, which could impact the performance of the US dollar and gold. Sterling is likely to remain supported amid a lack of significant data releases, while the Euro's recent strength may be showing signs of fatigue. Additionally, events such as the Reserve Bank of New Zealand's monetary policy update and German economic data are also anticipated to impact market sentiment.
The US dollar strengthened due to surging US Treasury yields and positive economic data, with the DXY index rising sharply. FOMC Chairman Jerome Powell's remarks suggested a delay in reducing borrowing costs, contributing to the dollar's support. USD/JPY broke resistance and may rally further, while EUR/USD plummeted and faces potential support at 1.0720. GBP/USD broke below the 200-day simple moving average and may find support at 1.2455.
