Dollar declines over 4% due to economic concerns

The dollar is set for its worst month in over a year due to concerns about the U.S. economy and President Donald Trump’s tariff policies. The Bloomberg Dollar Spot Index has dropped more than 4% from its peak in early February, as traders are losing confidence in the dollar. Analysts note that investors initially believed the tariffs would strengthen the dollar. However, the outcomes have been negative. Skylar Montgomery Koning, a strategist at Barclays, mentioned that the U.S. economy is showing signs of cooling, while Europe is increasing spending. Consumer confidence in the U.S. has also fallen to its lowest level in four years. Traders have shifted their bets against the dollar as of mid-March, moving away from a bullish stance they held in January. Portfolio manager Bill Campbell highlighted the uncertainty surrounding Trump’s many policies, which increases risks for investors. The dollar index fell 2.2% in March, the largest drop since November. Market predictions regarding tariffs have changed, with fears now focused on how they will affect the U.S. economy rather than other countries. Expectations for the dollar have also shifted lower as fears of a trade war grow. Analysts from Citigroup have reduced their dollar forecast due to its recent decline and the potential improvement in other regions like Europe and China. Countries affected by U.S. tariffs are working on their responses, with some expecting exemptions from the planned tariffs. Over the past two weeks, the Canadian dollar has gained strength, while the Mexican peso has also improved against the dollar. These developments suggest a significant change in the global currency landscape prompted by U.S. trade policies.