The US dollar opened the week under pressure after Moody’s downgraded America’s credit rating from Aaa to Aa1 on Friday, intensifying concerns over the nation’s rising debt.
This move comes as no surprise since other agencies had downgraded the US before, but the dollar was already weakening, suggesting further declines ahead.
In early Asian trading, the euro held steady around 1.1200 against the dollar, facing resistance near a descending trend line. The Japanese yen hovered just above its key support at 145.00 per dollar, with risks leaning toward a weaker dollar. Gold prices bounced off support near $3,168 but need to break above $3,270 to spark stronger buying.
Moody’s cited growing government debt-now about $36 trillion-and ongoing fiscal challenges as reasons for the downgrade. The agency warned that current tax and spending plans may worsen deficits, pushing debt to 134% of GDP by 2035, up from 98% in 2024.
Investors are watching closely for US economic updates, including trade talks and progress on the “big, beautiful” tax bill in Congress. The downgrade has already weighed on US stock futures and Treasury yields, signaling increased caution.
Overall, Moody’s decision adds pressure on the dollar and US assets, while the euro, yen, and gold test important technical levels that could shape market moves in the near term.
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