Dollar index down by more than 9%, year-to-date in 2025

Dollar index (DXY) is down by 0.05% today. At 12.04 a.m. Eastern time on 2^nd June, 2025 it is at 99.27 level. DXY is the index of the value of US dollar against major currencies. It has lost 9.27% year-to-date in 2025. This indicates to general weakening of US dollar against major currencies.

Dollar index likely to continue its downward trend

The DXY is likely to continue its downward trend. Higher tariffs imposed by US President Donald Trump will put upward pressure on inflation in United States. It is also likely to cause an economic slowdown, or even an economic recession, in US. The US economy contracted by 0.2% in the March quarter. If it contracts in June quarter too, then the economy will technically enter a recession. Both these factors will reduce the value of the dollar.

US Federal Reserve in its May meeting said that the risk of recession for the US economy has increased. The US central bank will be caught in a dilemma if the scenario of stagflation materializes. Stagflation means high inflation and high unemployment at the same time. If the central bank goes for an interest rate cut in stagflation, it may give a boost the economy and lower unemployment but may fuel inflation. And if it increases interest rate to control high inflation, unemployment rate will further shoot up.

Disclaimer: This content is only for informational purpose. It does not make any recommendation to act or invest.

Source: DXY