The U.S. dollar faces probable decline during the upcoming months because investors respond to increasing fiscal risks and tariff uncertainties and rising expectations about interest rate reductions according to foreign exchange strategists.
The dollar index has dropped by 11% throughout 2025 while reaching its lowest point since 2021 against both the euro and the pound. The dollar faces challenges because President Donald Trump maintains unpredictable tariff policies while his tax bill is expected to increase national debt by $3.3 trillion.
Short-dollar positions among investors have reached their highest levels since 2023 according to data from the Commodity Futures Trading Commission. The survey results from June 27–July 2 show that more than 80% of analysts predict the dollar trend to either continue or become stronger during July.
The market focuses on the upcoming expiration of the 90-day tariff pause which ends on July 9. The dollar faces its most significant influence from tariff developments according to nearly 40% of FX strategists during the upcoming period.
The dollar’s position as a safe-haven currency faces potential deterioration according to economic experts. BMO’s Jennifer Lee predicts dollar weakness will continue because of Trump’s Fed pressure and rising inflation threats and the central bank’s slow rate cut approach.
