On Monday morning, the US dollar index (DXY) closed at 103.71, close to the five month low of 103.21 hit last Tuesday, and has fallen nearly 6% since its high of 110.17 in mid January.

Goldman Sachs analysts pointed out that there have been two significant changes in the market recently:

The repricing of US assets - Due to the uncertainty of tariff policies, confidence in the US market has been dampened, and investors have reduced their exposure to the US dollar.

The German fiscal stimulus is driving up the euro - the German government has reached a 500 billion euro fiscal stimulus agreement, which is expected to boost the European economy.

Goldman Sachs analysts commented, "These two major changes pose significant challenges to market expectations of 'US economic superiority'

The latest economic data from the United States shows that the consumer confidence index has fallen to a nearly two-and-a-half-year low, while inflation expectations have risen. The market is concerned that Trump's trade policies may trigger an economic recession.

The euro is boosted by Germany's fiscal plan, while the yen remains strong

The euro was reported at $1.0881, slightly down from its five month high of $1.0947 set last Tuesday. Friedrich Merz, the new German Prime Minister, announced last week that he had reached a financial agreement with the Green Party and planned to significantly increase the issuance of treasury bond, which is expected to be approved by Parliament this week.

In addition, the Japanese yen continues to hover at a five month high, with the US dollar against the yen at 148.70, close to the low of 146.545 hit last Tuesday. The market generally expects the Bank of Japan to hold interest rates unchanged this week, but with Japanese companies raising salaries significantly for the third consecutive year, the possibility of future interest rate hikes is increasing.

Bank of Japan Governor Kazuo Ueda stated in a parliamentary speech that "wage increases are expected to drive consumer recovery, but there is still significant uncertainty about the overseas economic outlook.