Dollar's Slide: Impact of U.S. Credit Downgrade

The U.S. dollar experienced a significant dip against several currencies on Monday, reaching a ten-day low compared to the safe-haven yen. This downturn follows Moody's surprise downgrade of the U.S. government's credit rating due to rising concerns over its massive $36 trillion debt.

As the dollar loses momentum against major rivals, it disrupts a strong winning streak fueled by U.S. trade optimism and reduced fears of a global recession. Post-downgrade, market strategists see a potential increase in short selling of the dollar, with signs pointing to mounting pressure on U.S. Treasuries.

Adding complexity, the U.S. administration faces timing challenges while pursuing a budget approval from Congress. Meanwhile, fresh trade talks with the EU provide hope for additional agreements, complemented by previous discussions with Britain. However, uncertainties loom over potential deals with other nations.

(With inputs from agencies.)