By David Finnerty and Vassilis Karamanis

(Bloomberg) — The dollar (DX=F) extended its decline as worries over US tariffs increased after President Donald Trump said he would notify trading partners soon of unilateral levies.

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The Bloomberg Dollar Spot Index slid as much as 0.6% to the lowest level since July 2023 on Thursday, extending the previous day’s drop spurred by softer US inflation data. The euro rose to its strongest since November 2021.

Traders will be monitoring US producer-price data due later Thursday for confirmation of subdued pressures. Some of its components feed into core personal consumption expenditure, the Federal Reserve’s preferred measure of inflation. They will also watch an auction of 30-year Treasuries after yields surged last month on fiscal concerns.

“Dollar weakness has much more room to run,” said Vasileios Gkionakis, senior economist and strategist at Aviva Investors. He added the greenback’s weakness despite rising yields show eroding investor confidence in US assets.

The dollar’s decline spilled into the currency volatility market, reinforcing the inverse correlation between the greenback and hedging costs recently. Demand was particularly pronounced in the one-week tenor, which captures the Fed’s June 18 policy meeting.

What Bloomberg’s Strategists Say...

“Trader pricing still favors more Federal Reserve interest rate cuts, although the precise timing flips around depending on the prevailing investor mood. But what is consistent is the US dollar ploughing a path to the downside as FX trader convictions firm.”

— Mark Cranfield, Markets Live Strategist, Singapore

Currency traders will also be watching the upcoming Group-of-Seven summit for any trade negotiation developments.

“We are watching the G-7 summit closely for pending trade deals between the US and its key trading partners (e.g., Mexico and Canada),” said Alex Loo, macro strategist at TD Securities in Singapore. “Leaks this week may boost sentiment, especially the likes of Canadian dollar and Mexican peso.”

(Updates with pricing, analyst quote and options section.)

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