The US dollar weakened against major currencies on Friday as President Donald Trump prepared to sign a large tax cut bill. At the same time, pressure increased on countries to finalize trade deals before new tariffs take effect.
The Republican-led House of Representatives narrowly approved Trump’s massive spending and tax package, expected to add $3.4 trillion to the national debt, which already stands at $36.2 trillion. The bill is likely to be signed into law on Friday.
With the US markets closed for Independence Day, investors focused on the looming July 9 deadline. On that day, broad tariffs will begin on nations such as Japan that have not secured new trade agreements with the US.
“The appetite for the dollar is fading,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank. “US debt concerns are rising, and demand for US debt is weakening. The tariff tensions and trade disruptions will hurt US growth, and the Federal Reserve may have limited options to support the economy amid rising inflation risks.”
The dollar index faced its worst first half of the year since 1973. The rollout of tariffs has stoked worries about the US economy and the safety of government bonds.
Since April 2 — when the US announced new tariffs — the dollar has dropped over 6%. It recently hit its lowest levels in more than three years against the euro and the British pound.
On Friday, the dollar index slipped 0.1% to 96.92, reversing some of Thursday’s 0.4% gain. The euro strengthened, reflecting growing hopes for a trade deal with the US.
Trump announced that many countries would receive letters on Friday detailing the tariff rates they will face. This move signals a change from earlier promises to negotiate separate agreements with each trade partner.
European Commission President Ursula von der Leyen said the EU aims to reach a trade agreement “in principle” with the US before the tariff deadline. Japan, which has recently been a target of Trump’s tariff threats, plans to send its chief trade negotiator back to the US as soon as this weekend.
With the July 9 tariff deadline drawing near, market participants will closely watch diplomatic talks and trade developments that could impact the dollar’s direction in the coming weeks.