--- title: "The US dollar experiences its largest decline since the tariff turmoil in April last year! Traders anticipate further depreciation" description: "The unpredictability of U.S. policies—including Trump's threat to take over Greenland, the risks of pressuring the Federal Reserve, concerns about the fiscal outlook and debt burden, and political pol" type: "news" locale: "en" url: "https://longbridge.com/en/news/273910650.md" published_at: "2026-01-28T00:47:18.000Z" --- # The US dollar experiences its largest decline since the tariff turmoil in April last year! Traders anticipate further depreciation > The unpredictability of U.S. policies—including Trump's threat to take over Greenland, the risks of pressuring the Federal Reserve, concerns about the fiscal outlook and debt burden, and political polarization—are eroding market sentiment and dampening investor interest in U.S. assets. The Bloomberg Dollar Spot Index has seen its steepest four-day decline since April of last year, with the options market betting on further declines in the dollar, and the premiums for short-term contracts betting on a weaker dollar have risen to the highest level since Bloomberg began compiling data in 2011 The US dollar is experiencing its most severe sell-off in nearly four years, with traders betting that the dollar will weaken further. The Bloomberg Dollar Spot Index has seen its steepest four-day decline since the announcement of comprehensive tariffs in April last year, and the cost investors are paying to hedge against deeper sell-offs has reached a record high. The decline of the dollar has propelled other major currencies to multi-year highs. The euro and the pound have both risen to their strongest levels in about four and a half years, while the yen has rebounded significantly after Japanese officials hinted at possible intervention to support the currency, marking its best three-day gain since the global arbitrage trading collapse last August. This round of declines is driven by multiple factors. The unpredictability of US policy—including Trump's threat to take over Greenland, which shocked European allies, the risks of Trump pressuring the Federal Reserve, concerns about the US fiscal outlook and debt burden, and political polarization—are all eroding market sentiment. James Lord, head of emerging markets currency strategy at Morgan Stanley, stated, **"Unconventional catalysts are driving the dollar weaker," and policy uncertainty is undermining investor interest in US assets.** The Bloomberg Dollar Index fell to its lowest level since March 2022 on Tuesday, continuing its weakness after experiencing its worst annual performance since 2017. ## Expectations for Yen Intervention Rise The surge in the yen has become a key factor putting pressure on the dollar. Traders revealed last Friday that the New York Fed contacted financial institutions to inquire about the yen exchange rate—this preliminary step is typically taken before intervention, reigniting market speculation about coordinated currency intervention. George Catrambone, head of fixed income at DWS Americas, stated that the Fed officials' inquiry into the dollar-yen exchange rate "further depressed the dollar." The yen rose to 152.43. Japanese Finance Minister Shunichi Suzuki confirmed after the G7 meeting on Tuesday that the government would closely coordinate with US authorities to take appropriate action against exchange rate fluctuations if necessary. This statement reinforced market expectations for potential intervention. ## Major Currencies Strengthen Across the Board The weakness of the dollar has provided broad support for global currencies. The euro reached $1.1990, its strongest level since 2021. The pound rose 0.8% to $1.3791, also a new high since 2021. The Swiss franc surged 1.4% to $0.7660, reaching its strongest level since 2015. The emerging market currency index has risen for the fourth consecutive day, reaching a historical high after accounting for interest returns. Karl Schamotta, chief market strategist at Corpay, noted that "Washington's shift towards protectionism and weakened security commitments are prompting other countries to increase defense spending and strengthen competitive focus, compressing the growth and interest rate differentials that previously favored the dollar." ## Options Market Bets on Further Decline of the Dollar The options market shows that investors' expectations for the depreciation of the dollar are heating up. The premium on short-term contracts betting on a weaker dollar has risen to the highest level since Bloomberg began compiling data in 2011. The bullish expectations for other currencies have also reached multi-month highs, approaching or equating to levels seen after the tariff introduction in April last year. Bloomberg strategist Mark Cranfield stated, "The huge trading volume in G-10 currency options this week supports the view that the theme of dollar depreciation is gaining traction among investors. **Whether the Fed's rate inquiry marks the beginning of the so-called 'Mar-a-Lago agreement,' macro traders are independently judging that the dollar is in a declining channel."** Trading volume has been exceptionally active. On Monday, the volume through the Depository Trust Clearing Corporation reached the second-highest level on record, second only to April 3, 2025. ## Policy Risks Continue to Ferment Despite robust performance in U.S. economic data, traders expect the Fed to maintain interest rates on Wednesday, but the market still anticipates nearly two rate cuts of 25 basis points this year, contrasting with many other major central banks that are expected to remain unchanged or even raise rates. Trump's pending choice for the next Fed chair is also impacting the dollar, with market speculation that the new chair may be more inclined to lower borrowing costs. Another risk of a federal government shutdown is brewing, as Democrats vow to block the congressional spending bill unless Republicans remove funding for the Department of Homeland Security. Barclays analysts Mitul Kotecha and Lhamsuren Sharavdemberel wrote on Tuesday, "We are seeing the risk premium on the dollar accumulate again," noting the dollar's poor performance following Trump's Greenland threat. Bank of Nassau Chief Economist Win Thin stated, "The ongoing momentum of dollar selling this week is fierce, indicating that there is still some room for the dollar to decline." ### Related Stocks - [UDN.US - Invesco Db Dlr Idx Bearish ETF](https://longbridge.com/en/quote/UDN.US.md) ## Related News & Research | Title | Description | URL | |-------|-------------|-----| | 在週四早間，美元表現不一，因當天將有大量經濟數據發佈以及美聯儲官員發表講話 | 週四早盤，美元走勢不一，市場在等待全天經濟數據發佈和美聯儲官員的講話 | [Link](https://longbridge.com/en/news/276336344.md) | | 美聯儲承認應白宮要求進行 “極其罕見” 的美元兑日元 “匯率檢查” | 美聯儲確認應白宮的要求進行了罕見的 “利率檢查”，這表明可能會對貨幣市場進行干預。美元對日元的升值促使美國財政部尋求大規模購買日元的報價，以削弱美元。這一舉動表明偏好較弱的美元以促進出口。分析師認為這是白宮採取的異常主動立場。儘管美元有所下 | [Link](https://longbridge.com/en/news/276341787.md) | | OpenAI 新一輪融資或突破千億美元 據報亞馬遜、軟銀、英偉達及微軟參與投資 | OpenAI 即將完成新一輪融資，預計籌集超過 1000 億美元，估值可能超過 8500 億美元。主要投資者包括亞馬遜、軟銀、英偉達和微軟。融資將分階段進行，預計在本年度內完成。亞馬遜可能投資高達 500 億美元，軟銀 300 億美元，英偉 | [Link](https://longbridge.com/en/news/276297991.md) | | 金價 5000 美元「橫盤」只是表象？投行上調二季度目標至 5800:1980/2011 崩盤不會重演 | 澳新銀行（ANZ）將黃金二季度目標價從 5400 美元上調至 5800 美元，認為當前金價 5000 美元的震蕩整理並不意味著長期停滯。分析師指出，黃金的吸引力因美聯儲降息預期、地緣風險和全球債務壓力而增強，預計主要動力來自投資需求與黃金 | [Link](https://longbridge.com/en/news/276183307.md) | | 金價走弱，因美元上漲和風險偏好情緒主導 | 金價因美元上漲和風險偏好情緒影響，連續第二天下滑。美元的強勢削弱了黃金需求，交易者在等待 FOMC 會議紀要。黃金在亞洲時段滑落至 4922 美元，流動性因中國農曆新年假期而減弱。儘管缺乏看跌信心，黃金仍高於上週低點。市場關注即將發布的美國 | [Link](https://longbridge.com/en/news/276200400.md) | --- > **Disclaimer**: This article is for reference only and does not constitute any investment advice.