US dollar slides toward steepest weekly drop in seven months on policy uncertainty

As volatile US-Europe relations and rising policy uncertainty pressure the currency, it is undergoing its steepest weekly decline in seven months as the US dollar plunges into recession.

A US dollar index, which measures the value of the United States currency against a basket of six peers, fell to 97. 8. The gauge is on a weekly loss of more than 1%, the largest since June and highest since .

The policy decisions of President Donald Trump, whose recent withdrawal from tariff threats targeting European countries, have been under uncertainty by analysts. Reversals have also boosted concerns about the strength of US trade and economic strategy, undermining confidence in the greenback.

But the new slide is a long-term stretch for the dollar, which means that it’s hard to get under pressure from . Currency dropped 9 in 2025, with . The worst annual performance of 4% in eight years, its lowest annual rate since investors again assessed US growth and policy direction by the company.

Interest rate convergence between the US and other major economies is also generating pressure from pressure. The price of traders is now pricing in two interest rate cuts from the Federal Reserve in 2026, compared to the single cut proposed by Fed policymakers, narrowing yield differentials that have been positive for the dollar in recent years.

The dollar may be weaker in 2026, according to historical analysis; models suggest an additional decline of as much as 8% if current trends continue.

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