$Dollar Craters Near 3-Month Lows Amid Fiscal Skepticism

The US dollar is experiencing its worst week in nearly a year, trading near three-month lows as investors lose confidence in Washington's fiscal outlook.

The greenback's value has dropped by almost 1% this week, despite an attempt by the US Department of the Treasury to calm credit desks by doubling its planned buybacks of long-dated paper to at least $4 billion per operation starting in September.

However, the intervention had a short-lived effect, and investors continued to focus on expanding federal borrowing and a gross national debt that recently breached $40 trillion. This has led to a renewed surge in borrowing costs, with the 10-year Treasury yield climbing back to 4.70% and the 30-year yield hovering near 5.25%. As yields rise, the dollar's value continues to decline.

European majors are capitalizing on the greenback's weakness, with the Euro perched near three-month peaks and the Pound flirting with a six-month high. The yen has also drawn support from data showing Japan's core CPI accelerated to 1.8% in July, bolstering expectations for a Bank of Japan rate hike.