[Christian Harris]

The US Dollar Index (DXY) extended its decline for a fifth consecutive session on Friday, marking its longest losing streak in nearly a year.

The index slipped to 103.7, hovering at its lowest level in four months, as ongoing uncertainty surrounding trade policies and tariffs weighed heavily on market sentiment.

This decline reflects growing concerns about the US economic outlook and the potential impact of recent policy shifts under the Trump administration.

President Donald Trump initially announced a 25% tariff on Mexican and Canadian goods, a move that sparked fears of escalating trade tensions and disruptions to the North American supply chain.

However, the administration later exempted autos and ultimately suspended all tariffs on products covered by the North American trade agreement until April 2.

While this temporary reprieve provided some relief, early indicators suggest that the administration’s policies are already beginning to affect the economy.

The tariff announcements, coupled with the potential for further trade restrictions, have created an environment of uncertainty, dampening investor confidence and weakening the dollar.

Traders are now turning their attention to the upcoming jobs report, which will provide critical insights into the health of the US labour market.

The report is expected to shed light on whether the recent layoffs of federal workers, part of the DOGE (Department of Government Efficiency) initiative, are already impacting employment figures.

Economists are forecasting 170,000 jobs added in February, up from 143,000 in January, with the unemployment rate expected to remain steady at 4.0%.

However, the DOGE layoffs, which could reduce job growth by 10,000 to 50,000 over the next six months, pose a potential headwind.

The dollar index’s current position at a four-month low underscores the challenges facing the U.S. economy as it navigates a complex landscape of trade policy, labour market dynamics, and inflationary pressures.

As traders await the jobs report and monitor developments in trade negotiations, the dollar’s performance will likely remain volatile.

The outcome of these factors will be critical in determining whether the dollar can regain its footing or continue its downward trend in the coming weeks.

Source: Trading Economics

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