US Dollar Skids On Concerns About Implications Of Trump Tax Bill

Economic

Summary:

Republican hardliners say bill not cutting spending enough.Bessent to talk FX with Japan counterpart on G7 sidelines.'Sell America' investment theme continues to weigh on dollar.

The U.S. dollar fell for a third day against a range of currencies on Wednesday, as investors worried about the Trump administration's tax cut and spending bill, with Republicans still divided over the details of the legislation.

U.S. President Donald Trump met with House Republicans on Tuesday and failed to convince his party's holdouts to back his sweeping tax bill. Republican hardliners continue to argue the bill does not sufficiently cut spending, according to House Speaker Mike Johnson.

Amid the bill impasse, the eurorose 0.5% against the dollar to $1.1339, after earlier climbing to a two-week high.

"There's a general reallocation away from U.S. safe-haven assets, ex-equities, partly due to the budget bill," said Eugene Epstein, head of trading and structured products, North America, at Moneycorp in New Jersey. "Even before the bill, we already had an acceleratingly poor debt to GDP ratio. Our spending has outpaced growth."

Trump's tax bill would add $3 trillion to $5 trillion to the country's debt, according to nonpartisan analysts.

Traders were also wary of U.S. officials potentially angling for a weaker dollar as part of independent trade deals on the sidelines of Group of Seven finance minister meetings underway in Canada.

Developments in Trump's global tariff war, which have swung currencies wildly in recent months, have slowed considerably this week, even as the clock ticks to the end of a 90-day tariff respite for U.S. trade partners in the absence of new deals.

While markets remain optimistic that the White House is eager to get trade flowing again on a sustained basis, talks with close allies, Tokyo and Seoul, appear to have lost momentum.

All this has combined to keep the dollar under pressure and U.S. Treasury yields rising, as the "sell America" theme continues to inform investment decisions, if in a less dramatic fashion than earlier this month.

The yenstrengthened against the dollar, which fell 0.6% to 143.64 yen, extending gains derived in part from a steep rise this week in domestic bond yields (JP20YTN=JBTC).

Yields on 30-year Japanese government bonds surged to new records on Wednesday in the wake of a poor auction result that raised doubts over coming debt sales in the weeks ahead. Super-long yields have been on the rise, following U.S. Treasury yields higher and as concerns swirled about new fiscal stimulus ahead of a Japanese upper house election slated for July.

An auction of 20-year U.S. Treasuries later on Wednesday (US20YT=RR) might offer a litmus test of investor appetite for long-dated U.S. debt.

"Higher Japanese yields narrow the gap with U.S. Treasuries, reducing the incentive to hold the dollar," wrote Forex.com analyst Fawad Razaqzada in emailed comments.

"With Japanese 10-year bonds climbing and U.S. yields holding steady, the tide may be turning for dollar/yen. The currency pair which found short-lived relief around 140.00, looks vulnerable again."

The yen, along with safe-havens like the Swiss franc and gold, also got a lift after CNN on Tuesday reported that new intelligence gathered by the United States suggests Israel is making preparations to strike Iranian nuclear facilities.

A Moody's downgrade of the U.S. sovereign debt rating on Friday, meanwhile, may have had only a limited impact on markets, but it has added to the narrative of less faith in U.S. assets as safe havens. As a result, the dollar was down on the year against every major currency.

Market participants also looked ahead to U.S.-Japan talks, with Japanese Finance Minister Katsunobu Kato later this week.

Kato said ahead of an expected meeting with U.S. Treasury Secretary Scott Bessent that talks on exchange rates would be based on their shared view that excessive volatility is undesirable.

In other currencies, the poundhit its highest since February 2022 after data showed UK consumer inflation flared hotter in April than most economists expected, thereby clipping some of the Bank of England's scope to cut rates quickly.

Sterling was last up 0.4% at $1.3443.

Currency bid prices at 21 May 03:55 p.m. GMT
Description	RIC	Last	U.S. Close Previous Session	Pct Change	YTD Pct	High Bid	Low Bid
Dollar index		99.511	99.963	-0.44%	-8.28%	99.971	99.395
Euro/Dollar		1.1337	1.1286	0.46%	9.51%	$1.1362	$1.1281
Dollar/Yen		143.67	144.575	-0.6%	-8.67%	144.415	143.465
Euro/Yen		162.89	163.03	-0.09%	-0.2%	163.3	162.67
Dollar/Swiss		0.8254	0.8284	-0.36%	-9.05%	0.8284	0.821
Sterling/Dollar		1.3439	1.3391	0.37%	7.47%	$1.3468	$1.3387
Dollar/Canadian		1.3824	1.3915	-0.64%	-3.86%	1.3912	1.3825
Aussie/Dollar		0.6464	0.6424	0.65%	4.49%	$0.6466	$0.6419
Euro/Swiss		0.9357	0.9344	0.14%	-0.38%	0.9361	0.9315
Euro/Sterling		0.8433	0.8423	0.13%	1.95%	0.8459	0.8423
NZ Dollar/Dollar		0.5962	0.5926	0.62%	6.57%	$0.5964	0.5922
Dollar/Norway		10.1279	10.2465	-1.16%	-10.85%	10.2578	10.1268
Euro/Norway		11.4872	11.5624	-0.65%	-2.39%	11.605	11.468
Dollar/Sweden		9.5539	9.6301	-0.79%	-13.28%	9.6441	9.5433
Euro/Sweden		10.8313	10.8669	-0.33%	-5.54%	10.8865	10.828

Source: TradingView

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Adam

Commodity

Oil swung on a CNN report that Israel is preparing to potentially strike Iranian nuclear facilities, while traders assessed data showing an increase in US crude stockpiles.

West Texas Intermediate traded near $62 a barrel after government data showed that US crude inventories rose to 443.2 million barrels, the highest since July. Brent futures traded near $65.30.

Oil has been volatile since last week on mixed headlines about the fate of Iran-US nuclear talks, which could pave the way for more barrels to return to a market that’s expected to be oversupplied later in the year. An attack by Israel would hinder any progress in those negotiations and add to unrest in the Middle East, which supplies about a third of the world’s crude.

It wasn’t clear whether a final decision on any attack had been made, CNN said, citing US intelligence and unidentified American officials.

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Iran has been able to keep exporting crude in spite of increasing sanctions by the US and allies including the UK and Europe. Tehran has even managed to boost supply recently, according to Goldman Sachs Group Inc.

“Iran has increased its supply by about a million barrels a day over the last couple of years,” Samantha Dart, Goldman’s co-head of global commodities research, said on Bloomberg Television. “If you remove a million barrels a day from Iran, this could represent an upside of about $8 a barrel to the crude oil price.”

Source:Bloomberg

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Adam

Stocks

Bond

Wall Street Slumps as Treasury Yields Rise and Budget Concerns Deepen

U.S. stocks are trading lower in early Wednesday action, pressured by rising Treasury yields and renewed concerns about U.S. fiscal policy. Traders are uneasy over a new Republican tax bill that could widen the federal deficit, following Moody’s recent downgrade of U.S. credit. The benchmark 10-year yield has climbed to 4.53%, while the 30-year has risen above 5%, both unsettling levels for equity markets.

S&P 500: Rising Treasury Yields, Moody’s Downgrade and Budget Fears Hit US Stocks_1

Daily E-mini S&P 500 Index

The Dow Jones Industrial Average is down 0.9%, the S&P 500 is slipping by 0.7%, and the Nasdaq Composite is off by 1.1% as of the first 90 minutes of trading. The losses interrupt a strong month-long rebound. The S&P 500 and Nasdaq had each climbed more than 14% and 19%, respectively, since the last market dip triggered by new tariffs. But with bond yields rising again and political risk escalating, investors are pulling back from risk assets.

Is the Federal Budget Bill Driving Bond Yields and Investor Anxiety?

All eyes are on Washington, where GOP leaders are scrambling to push through a tax-cut bill. While the measure would lower taxes, it has run into opposition within the party over state and local deduction limits. Nonpartisan forecasts estimate the bill could add between $3 trillion and $5 trillion to the national debt, now at $36.2 trillion.

The budget standoff, coupled with recent tariffs and a credit downgrade from Moody’s, has triggered a spike in yields. Analysts suggest bond markets are pricing in long-term fiscal stress. “There’s concern that this bill does little to slow inflation or reduce the debt burden,” said CFRA’s Sam Stovall. “The market sees more debt, not less.”

Which Sectors and Stocks Are Taking the Hardest Hit?

Daily Amazon.com, Inc.

All 11 S&P 500 sectors are in the red, with tech and consumer discretionary leading declines. Tech stocks, especially rate-sensitive names, are being hit hard. Amazon and Apple are down over 1% as higher rates discount future earnings potential.

S&P 500: Rising Treasury Yields, Moody’s Downgrade and Budget Fears Hit US Stocks_3

Daily UnitedHealth Group Incorporated

UnitedHealth Group UNITEDHEALTH GROUP INCORPORATED (Delaware) $306.81 -4.59% is the Dow’s worst performer, falling over 5% after HSBC downgraded the stock and reports surfaced that it had quietly paid nursing homes bonuses to cut hospital transfers.

S&P 500: Rising Treasury Yields, Moody’s Downgrade and Budget Fears Hit US Stocks_4

Daily Target Corporation

Target has slumped nearly 7% after cutting its annual outlook, citing weaker discretionary spending. Semiconductor firm Wolfspeed has collapsed 66% on bankruptcy concerns.

Is Wall Street’s Rally Losing Steam After a Strong Month?

Despite the day’s selloff, major indexes are still enjoying sharp gains from last month’s lows. However, some strategists warn that the recent rebound may be overextended. “Investors are beginning to question whether this run-up was too fast,” said LPL Financial’s Kristian Kerr.

Morgan Stanley has upgraded U.S. equities to “overweight,” but acknowledges ongoing policy uncertainty. Market breadth remains weak, with declining stocks outpacing gainers nearly 4 to 1 on the NYSE.

What Should Traders Watch Next?

Traders should focus on Congressional negotiations over the budget and potential tax implications. Continued upward pressure on yields will also be key. A break above recent yield highs could increase equity market stress, especially in high-growth sectors. Any surprise in upcoming inflation data or new geopolitical developments could further rattle investor sentiment.

Source: fxempire

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Daniel Carter

Latest news on the Israeli-Palestinian conflict

Political

Friedrich Merz emphasized the importance of Germany playing an "active, supportive, strong" role in Ukraine peace efforts.

German Chancellor Friedrich Merz on Wednesday dampened expectations of a quick end to the war in Ukraine.

"There are currently no signs that this war will end quickly," Merz said in Berlin. However, when mentioning diplomatic efforts to end the war, he referred to the potential mediation of the pope as "the last earthly authority."

Merz said one could only hope that it would at least be possible to bring the conflicting parties together for a constructive discussion in the Vatican. The chancellor also emphasized the importance of Germany playing an "active, supportive, strong" role in the peace efforts.

Trump: 'This is not my war'.

Merz's remarks follow Monday's telephone conversation between US President Donald Trump and Russian President Vladimir Putin.

After the call, Trump wrote that Russia and Ukraine would "immediately start negotiations toward a ceasefire and, more importantly, an end to the war." He also mentioned that the Vatican said it would be very interested in hosting the negotiations.

Trump reiterated his warning that he could abandon the process to seek a ceasefire if there is no progress in the talks. "This is not my war," he told reporters.

On Tuesday, Italian Prime Minister Giorgia Meloni announced that Pope Leo XIV had confirmed the Vatican's willingness to host peace talks between the two sides. The Vatican has not issued a public statement on the matter.

Trump misjudged influence on Putin, Pistorius says.

Meanwhile, German Defense Minister Boris Pistorius said Trump misjudged his influence on Putin.

"I suspect he assessed his negotiating position incorrectly," Pistorius told the Deutschlandfunk public radio broadcaster, referring to Trump's apparently abandoned efforts to pressure Putin into accepting an unconditional 30-day ceasefire.

"Nothing is really happening. It's all new places, new timelines — and it just means Vladimir Putin can continue his attacks on Ukraine. But there is no peace in sight," Pistorius said.

Since the phone call between the Russian and US presidents yielded no progress in the Ukraine peace talks, Europe was prompted to announce new sanctions on Russia.

Pistorius urged further action to cut off Russia's financial lifelines.

"The goal must be to curb the considerable flow of money into Russia's state coffers, which helps finance the war," he said.

The German defense minister argued that only by doing so can the West effectively degrade Russia's ability to sustain its war in Ukraine, citing revenues from Russian oil and gas exports as an example.

Pistorius also stressed the need to bolster Ukraine's rearmament efforts, noting that the country has production capacity in its arms industry but lacks the funding to utilize it fully.

"We will step in together and fill these capacity gaps," Pistorius said.

Source: DW

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Thomas

Cryptocurrency

According to data from Binance, the world's leading cryptocurrency exchange, Bitcoin gained 2.29% on the day, pushing the digital asset past its previous record high.

This rise represents a continuation of the upward momentum we saw throughout the second quarter of 2025. Bitcoin's price steadily rose from its March lows, overcoming several resistance levels with strong trading volume and renewed investor confidence.

Key points:

Daily High: $109,414.44
Daily Low: $106,119.13
Size: 350 Bitcoin
Price increase: +$2,448.76 (+2.29%)

Bitcoin rises to an all-time high above $109,400_1

This latest surge follows weeks of bullish consolidation, with price action forming a clear uptrend since mid-April. Traders point to a combination of institutional interest, limited supply due to the halving effects, and growing macroeconomic uncertainty as catalysts for the rally.

Market sentiment

Technical analysts point out that the bullish candles and increased trading volume indicate strong momentum, which could pave the way for further gains. A senior analyst at Blockview Markets stated, "We are now in uncharted territory. A break above $109,000 opens the door to $115,000 and beyond, assuming this buying pressure continues."

Looking forward

With investor sentiment rising and demand showing no signs of slowing, many in the cryptocurrency community are optimistic about Bitcoin's future trajectory. However, some analysts warn of potential increased volatility as the asset tests psychological resistance levels.

As of press time, Bitcoin is still trading near its new high, cementing its position as the leading digital store of value.

Source: CryptoSlate

Risk Warnings and Disclaimers

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Warren Takunda

Cryptocurrency

Key points:

Bitcoin and gold move higher in step amid jitters over Japan’s debt problem reach “boiling point.”

$108,000 remains a keen target for Bitcoin bulls amid ongoing corporate buying.

Some still see the current BTC price uptrend coming to an abrupt end.

Bitcoin kept up pressure on $108,000 at the May 21 Wall Street open as a trader flagged multiple bearish divergences. Bitcoin Bulls Grill Sellers as Japan Debt Woes Send Gold Past $3.3K_1

Bitcoin Bulls Grill Sellers as Japan Debt Woes Send Gold Past $3.3K_1

BTC/USD 1-hour chart. Source: Cointelegraph/TradingView

Bitcoin joins gold in Japan debt reaction

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD returning to near the top of its intraday range as the US trading session began.

After its highest-ever daily close, BTC/USD looked increasingly primed for a rematch with all-time highs just above $109,000. Bitcoin Bulls Grill Sellers as Japan Debt Woes Send Gold Past $3.3K_2

Bitcoin Bulls Grill Sellers as Japan Debt Woes Send Gold Past $3.3K_2

Fresh concerns over Japan’s national debt offered a boost to both crypto and gold on the day, with the latter reaching $3,320 per ounce, its highest since May 12. Bitcoin Bulls Grill Sellers as Japan Debt Woes Send Gold Past $3.3K_3

Bitcoin Bulls Grill Sellers as Japan Debt Woes Send Gold Past $3.3K_3

XAU/USD 1-day chart. Source: Cointelegraph/TradingView

“A fresh wave of volatility is gripping Japanese fixed income markets as 30-year Japanese Government Bond (JGB) yields surge past 3%, breaching historic levels and unsettling global investors,” trading firm QCP Capital commented on the issue in its latest bulletin to Telegram channel subscribers.

“Japan’s ballooning debt situation has long been a simmering concern, but it is now reaching a boiling point.”

On Bitcoin, QCP suggested that recent gains had been fueled by corporate accumulation, while breaking all-time highs could reawaken retail interest.

“Price action appears closely tied to treasury accumulation by Strategy and Metaplanet, who remain the headline buyers at current levels. There is growing concern that these entities may represent the last of the marginal bid, particularly with BTC hovering near ATHs,” it continued.

“A slowdown in their buying could trigger profit-taking from other market participants and potentially reverse the prevailing uptrend.”

BTC price trend strength flashes warning

Elsewhere, concerns over trend strength came from the BTC/USD chart itself.

Popular trader Roman, among those taking a conservative view of market structure, warned that Bitcoin’s relative strength index (RSI) was now offering three bearish divergences at once on daily timeframes.

“3 levels of bearish divergences now appearing on RSI. I would expect 101 to be retested before we potentially move higher (or lower),” he told X followers.

“I still have my sights on lower overall but could provide a decent short term entry for both shorts & longs.”BTC/USD 1-day chart with RSI data. Source: Cointelegraph/TradingView

As Cointelegraph reported, there is no shortage of bullish BTC price targets currently in force.

$116,000 is an increasingly popular area once all-time highs are breached, with a $128,000 “blow-off top” also on the radar.

Others have made much loftier predictions, including $220,000 or more in 2025.

Updating his long-term view, trader and analyst Aksel Kibar said that the bull trend “remains intact” this week, with an accompanying chart reiterating a $137,000 target. Bitcoin Bulls Grill Sellers as Japan Debt Woes Send Gold Past $3.3K_5

Bitcoin Bulls Grill Sellers as Japan Debt Woes Send Gold Past $3.3K_5

BTC/USD 1-month chart. Source: Aksel Kibar/X

“Despite relentless macro headwinds including surging bond yields, tariff escalations and mounting stagflation risks in the US for Q3 and Q4, BTC has demonstrated remarkable resilience over the past month,” QCP concluded.

“That said, a breakout to new highs could ignite a fresh wave of FOMO, dragging in sidelined retail capital and pushing prices even higher.”

Source: Cointelegraph

Risk Warnings and Disclaimers

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Daniel Carter

Economic

Political

U.S. House of Representatives Speaker Mike Johnson told reporters that negotiators had reached agreement on deductions for state and local taxes -- a major issue for Republican lawmakers from New York and California, who are critical to his narrow majority -- but hardliners continue to argue the bill does not sufficiently cut spending.

"There is a chance for a vote today," Johnson said.

The gate-keeping House Rules Committee at around 1 a.m. EDT (0500 GMT) began debate on a measure that is estimated to add trillions to the nation's $36.2 trillion in debt. Johnson had earlier expressed hope of a floor vote as early as Wednesday. Success in the House would set the stage for what is expected to be weeks of debate in the Senate.

U.S. stocks were slightly lower on Thursday, while yields on federal government bonds rose, as investors showed signs of concern about the nation's growing debt.

Republicans, who control both chambers of Congress, are waiting for their leadership's overall amendment package to the bill that is meant to coalesce the party's sparring factions. Democrats have also proposed more than 500 amendments.

If the legislation is passed by Congress, it would reduce some health and food benefits for low-income Americans, cancel green-energy programs and provide tens of billions of dollars for immigration enforcement.

Trump huddled with Republican lawmakers on Tuesday to try to persuade holdouts to get in line on what he calls a "big, beautiful bill," but the visit failed to sway the wide array of lawmakers who object to specific features.

Johnson has little room for error, as his party holds a narrow 220-212 majority and a handful of "no" votes from his side could scuttle the bill, which Democrats say favors the wealthy and cuts to needed social programs.

The bill would extend the 2017 tax cuts that were Trump's signature first-term legislative achievement, and also add tax breaks on income from tips and overtime pay that were part of his populist push on the campaign trail last year. Nonpartisan analysts say it could add $2 trillion to $5 trillion to the federal debt.

Item 1 of 4 U.S. President Donald Trump gestures next to U.S. House Speaker Mike Johnson (R-LA), on the day of a closed House Republican Conference meeting on Capitol Hill in Washington, D.C., U.S., May 20, 2025.

"Failure is not an option in getting this done," Representative Jason Smith of Missouri, the Republican chairman of the House tax-writing committee, said during the debate on Wednesday that "Americans voted for an America where workers and families will thrive again, Main Street and rural towns will grow again, and America wins again."

Democrats said the bill disproportionately benefits the wealthy and cuts programs needed by working families.

"We're going to ask Americans to finance tax cuts for billionaires on the national debt - on the credit card," said Representative Gwen Moore, a Democrat on the tax-writing committee. "Deficits aside, this bill is ugly because it is ultimately a betrayal of the contract that we have made with the American people, and especially to our babies and to our working people."

The Medicaid health program for low-income households has proven to be a major sticking point, with fiscal hawks pushing for cuts to partly offset the cost of the bill's tax components, which moderate Republicans say would hurt voters whose support they will need in the 2026 midterm congressional elections.

The bill also faces objections from a handful of centrist Republican lawmakers from high-tax states, including New York and California, who are pushing to expand a proposed $30,000 cap on deductions for state and local taxes.

Trump is pushing for unanimous support from Republicans, and said on Tuesday that the holdouts could be drummed out of the party.

The bill would raise the nation's debt ceiling by $4 trillion. Lawmakers must act to address that limit by this summer or risk triggering a devastating default.

Credit rating firm Moody's last week stripped the U.S. government of its top-tier credit rating, citing the nation's growing debt.

If the package passes the House, it would then head to the Senate, where Republicans hold a 53-47 majority. That would not be expected until next month, as members of Congress are preparing to leave Washington next week for a week-long break.