Part 5/9:
Adding to the bearish sentiment is the recent downgrade risk of US credit ratings, with credit agencies like S&P and Moody’s indicating that the United States' rating could be lowered soon. Such warnings increase investor caution and contribute to dollar outflows, diminishing its global reserve status.
Moreover, these persistent asset sales are impacting the dollar's value—causing the worst performance of the year against a backdrop of declining inflation numbers, which make further rate hikes increasingly unlikely. Fed officials have indicated a preference for maintaining higher interest rates longer, but the possibility of a rate cut looms as inflation metrics improve, reducing the incentive for investors to hold US dollars.