The euro is being tossed around by the waves while the US dollar continues to be pressured after the House of Representatives passed a massive tax and spending bill proposed by President Donald Trump. The move is expected to add US$3.8 trillion to the national debt that has already reached US$36.2 trillion, thus raising concerns among investors about the US fiscal stability. The market responded with a massive sell-off in stock and bond markets that continued to weigh on the US dollar.
The US dollar fell to its lowest level since May 7, reaching 142.80 yen before recovering slightly, while lackluster 20-year bond sales reinforced the negative narrative on US assets. Strategists warned that the rising fiscal deficit will require governments to issue more bonds at a time when demand is already weak. This is expected to continue to put pressure on the dollar and bond markets in the near term.
In Europe, the euro fell 0.3% against the US dollar after data showed that eurozone business activity unexpectedly contracted, signaling a gloomy economic outlook. The impact of Trump’s trade tariffs is being felt, while a new trade deal is yet to be seen. The pound held steady near a three-year high after UK inflation data dampened expectations of a rate cut by the Bank of England.
Amidst the economic uncertainty, Bitcoin surged to an all-time high of $111,862.98, up 3.3% from the previous day. The rise was driven by demand for non-US alternative assets, as well as renewed hopes for stablecoin regulation. According to Deutsche Bank analysts, US fiscal instability is also a key factor strengthening Bitcoin’s appeal as investors seek refuge from traditional market turmoil.
