Konstantinos Chrysikos

The US Dollar extended its decline on Wednesday, marking a third consecutive daily drop, as markets grew increasingly uneasy over the country’s fiscal outlook. President Trump’s tax bill has intensified concerns about long-term fiscal sustainability, especially following Moody’s decision to downgrade the US sovereign credit rating on Friday.

At the same time, Federal Reserve officials added to the cautious mood. St. Louis Fed President Alberto Musalem warned that tariffs, even after the recent de-escalation with China, are likely to weaken economic activity and soften the labor market. Cleveland Fed President Beth Hammack echoed similar concerns, highlighting the risk of stagflation.

Meanwhile, in the bond market, US Treasury yields edged higher, with the 10-year note rising above 4.53%, highlighting traders’ caution over economic stability. In the current climate of uncertainty, yields could continue to rise.

Looking ahead, attention turns to the upcoming US-Japan bilateral meeting during this week’s G7 finance summit, where discussions on currency stability may also weigh on investor confidence.

Chrysikos is Head of Customer Relationship Management at Kudotrade