The U.S. Dollar Index (DXY) has entered a significant long-term bearish phase, declining nearly 12% from its January 2025 peak of 109.57 to a low of 96.75 in April, driven by macroeconomic and geopolitical factors.

Meanwhile, the euro has appreciated 13% against the dollar in 2025, along with gains for the yen and yuan, as the dollar's overvaluation compared to its 50-year average fuels its depreciation.

This decline is fueled by concerns over U.S. fiscal policy, aggressive tariffs from the Trump administration, and a global trend toward de-dollarization.

As a result, the U.S. debt-to-GDP ratio is projected to surpass 130% by 2030, prompting investors and central banks to diversify reserves into gold and other currencies.

Gold inflows in 2025 have exceeded $326 billion, reflecting diminished trust in the dollar as a safe haven, while the Federal Reserve is expected to cut interest rates by 50 basis points this year.

In this context, the Invesco DB US Dollar Index Bearish Fund (UDN) is designed to profit from the dollar's decline by shorting U.S. Dollar Index futures, offering a strategic tool for investors.

As of July 16, 2025, UDN closed at $18.63, with analysts projecting a 3.16% increase over the next three months, despite resistance at $18.70 and support at $18.55.

Technical indicators for UDN are mixed, suggesting volatility but potential gains if the dollar continues to weaken, with a recommended stop-loss at $17.79 to manage downside risk.

Investors are advised to adopt dollar-cost averaging, pair UDN with hedging strategies, monitor key levels for the DXY and UDN, and prepare for scenarios including a dollar rebound.