The Impact of U.S. Debt and Fiscal Policy on Forex In 2025, the U.S. is facing unprecedented debt levels — and forex traders are watching fiscal policy like hawks. Why? Because massive deficits affect USD strength, interest rates, and global sentiment. If the U.S. Treasury raises borrowing, bond yields rise — which can strengthen the dollar… temporarily. But if debt leads to inflation or political instability, USD can plummet. Smart traders monitor: Debt ceiling debates (they rock DXY) Bond auctions Fed-Treasury coordination signals They also pair this macro outlook with structure. For example: if DXY is sitting on a weekly OB and debt talks collapse → bearish confirmation. These trades don’t happen daily — but when they do, they’re massive. Don’t ignore fiscal risk. It can turn a choppy week into a goldmine of volatility.