Why is the US dollar experiencing its biggest weekly fall in a decade?

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The US Dollar is Experiencing its Biggest Weekly Fall in a Decade Due to Stimulus Measures and Easing Liquidity Squeeze

The US dollar is on track for its largest weekly decline in over a decade, a significant reversal from its earlier strength. This downturn is attributed to substantial government stimulus packages and coordinated central bank actions aimed at increasing dollar supply, which have bolstered other major currencies. Concurrently, a sharp rise in US jobless claims has highlighted the economic impact of the coronavirus pandemic, further pressuring the dollar.
Government and Central Bank Stimulus Efforts

Trillions of dollars in stimulus initiatives from governments and central banks globally have played a crucial role in tempering the market rout caused by the coronavirus. Notably, the United States has committed to a US$2.2 trillion stimulus package. These large-scale spending pledges, combined with concerted efforts by central banks to enhance dollar liquidity, have supported a rally in other major currencies, diminishing the dollar's dominance.
Easing Dollar Funding Squeeze

The intense demand for dollars observed in overseas markets has been met by the Federal Reserve's enhanced swap lines, leading to a considerable easing of the dollar funding squeeze in the interbank market. This week has seen a significant reduction in currency basis swap spreads, which represent the premium investors pay over interbank rates to secure dollars through foreign currency swaps. The successful implementation of measures by the Federal Reserve to address dollar liquidity issues is now becoming more apparent.
Impact of US Economic Data

An unprecedented surge in US jobless claims has underscored the profound impact of the coronavirus on the American economy. This economic vulnerability, coupled with the aforementioned stimulus and liquidity measures, has contributed to the weakening of the US dollar. The dollar index experienced a sharp reversal, having recorded its biggest weekly gain since the financial crisis in the preceding week, highlighting the market's volatility.

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Why is the US dollar experiencing its biggest weekly fall in a decade?

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