US dollar index in free fall: decline by 10.8 % due to debt crisis and trade policy uncertainties

US dollar index in free fall: decline by 10.8 % due to debt crisis and trade policy uncertainties

The development of the US dollar index (DXY) in the first half of 2025

In the first half of 2025, the US dollar index (DXY) recorded a decline of around 10.8 %. This downward trend of the dollar reflects a variety of economic challenges that influence trust in the US currency.

An essential factor for the decline in the dollar value is the increasing debt of the United States. High debt can affect the government's confidence in the ability of the government to fulfill its financial obligations and thus endanger the stability of the dollar.

In addition, the trade policy instability has contributed significantly to the devaluation of the US dollar. Unpredictable trade relationships and persistent tensions with other countries have made the economic environment more uncertain. This uncertainty can lead to investors fleeing to safer currency systems, which further presses the value of the dollar.

Another critical point is the increasingly less independent Federal Reserve (FED). The Fed's monetary policy decisions have a significant impact on the dollar. A perceived loss of independence could undermine the trust of the markets in the ability of the central bank to promote a stable economy.

Overall, the development of the US dollar index shows in the first half of 2025 how closely economic factors, political decisions and the trust of investors are linked. A permanently stable dollar is decisively dependent on a balanced fiscal policy, a stable trade strategy and the independence of the central bank.