The dollar weakened against major currencies as worries about the U.S. trade deficit lingered in the market. Investors remained cautious, awaiting further economic data that could influence the Federal Reserve’s monetary policy decisions.

Analysts noted that the persistent trade deficit, where the value of imported goods and services exceeds that of exports, continued to weigh on the dollar. This imbalance creates a surplus of dollars held overseas, potentially diminishing its value.

Currency traders are closely watching upcoming economic releases, including reports on employment, inflation, and manufacturing activity. These indicators will provide insights into the strength of the U.S. economy and could prompt adjustments in interest rate expectations.

Some economists believe that a weaker dollar could help to narrow the trade deficit by making U.S. exports more competitive and imports more expensive. However, they also caution that a sharp decline in the dollar could trigger inflationary pressures and destabilize financial markets.

The dollar’s performance will likely remain sensitive to shifts in investor sentiment and evolving economic data in the coming weeks.