Priyanka Tiwari
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Suspense crime, Digital Desk : In a major reversal of fortune, the US dollar experienced a dramatic downturn in the first half of 2017, marking its worst first-half performance in over a decade. The currency fell approximately 10% against a basket of six major global currencies, a significant slump that caught many investors by surprise.
This decline was largely driven by a combination of fading optimism in the United States and renewed economic strength in Europe. The initial "Trump trade"—a surge in the dollar's value following the 2016 election on hopes of tax cuts and fiscal stimulus—began to unravel. Doubts grew in Washington about the administration's ability to push its economic agenda through Congress, leading to increased political uncertainty.
Simultaneously, the Eurozone's economy was showing robust signs of recovery. This growing strength in Europe made the euro a more attractive investment, pulling capital away from the dollar and causing the euro to surge against the US currency.
Adding to the dollar's woes were questions surrounding the US Federal Reserve's monetary policy. While the Fed was expected to continue raising interest rates—a move that typically strengthens a currency—weakening inflation data cast doubt on how aggressively it could act.
This combination of political gridlock at home and a brighter economic outlook abroad created a perfect storm for the dollar. The currency, which had started 2017 on a high, ended the first six months in a significant downturn, reflecting a major shift in global investor sentiment.
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