Dollar Dips as Fiscal Concerns Loom, Global Currencies React

The U.S. dollar exhibited weakness on Friday, marking its first weekly drop in five weeks against major currencies like the euro and the yen. Concerns over the United States' escalating fiscal instability are pushing investors toward safer havens. Moody's recent downgrade of U.S. debt ratings has intensified focus on the nation's mounting $36 trillion debt and the additional burden President Donald Trump's tax bill may impose.

In a closely watched move, the tax bill, which Trump called a "big, beautiful bill," narrowly passed in the Republican-controlled U.S. House of Representatives, now awaiting Senate debate. This progression keeps market sentiment fragile. The euro gained 0.36% to $1.132 on Friday, recovering from a string of weekly losses, thanks to a temporary halt in tariffs that had temporarily buoyed the dollar.

Market shifts have highlighted fiscal risks over tariffs, causing volatility. The dollar index, which measures the dollar against six major currencies, is expected to drop by 1.35% this week. Amid a selloff in U.S. Treasuries, yields remain elevated, signaling fiscal concerns over growth optimism, impacting investor decisions globally.

(With inputs from agencies.)