Dollar Remains Near Three-Month Lows as Investors Assess U.S. Debt and Trade Tension Risks

The U.S. dollar remained near three-month lows on Monday as foreign exchange market participants assessed the limited effect of Washington's Treasury bond buyback program, growing trade tensions in North America, and anticipated geopolitical sanctions.

The Dollar Spot Index rose 0.14% and reached 98.88, though the dollar failed to achieve a significant recovery. The index declined approximately 1% last week.

One of the factors pressuring the dollar continues to be the limited effectiveness of steps taken by the U.S. Treasury Department. Last week, Washington announced that it would at least double the limit for each long-term Treasury bond buyback operation and increase it to $4 billion. The program aims to improve liquidity in the secondary market.

However, foreign exchange market participants did not view this step as a significant supporting factor for the dollar and shifted attention to the U.S. fiscal situation. The country's total government debt exceeds $40 trillion, while the annual budget deficit stands at approximately $1.8 trillion.

Some investors believe that large-scale debt issuance will keep long-term bond yields at elevated levels. Consequently, even the traditional advantage derived from U.S. interest rates has failed to significantly strengthen positive sentiment toward the dollar.

Additionally, the market faces further uncertainty from escalating trade tensions in North America and expectations of new geopolitical sanctions, which complicate investors' assessment of the dollar's future direction.