Falling U.S. Treasury yields tend to weaken the dollar as lower yields reduce the attractiveness of U.S. assets for global investors. Treasury yields reflect the return on government bonds, and when they decline, investors may seek higher returns elsewhere, leading to capital outflows from the U.S. This reduces demand for the dollar, causing it to depreciate against other currencies. Lower yields also signal expectations of Federal Reserve rate cuts or economic slowdown, further pressuring the dollar. If the Fed lowers interest rates in response to falling yields, the yield advantage of the dollar diminishes compared to other currencies, encouraging investors to shift toward higher-yielding assets. However, the dollar’s movement also depends on global risk sentiment. In times of uncertainty, investors often flock to the dollar as a safe-haven asset, even if yields decline. But in a stable or improving global economy, falling Treasury yields typically weaken the dollar as investors diversify into riskier assets. Overall, a sustained drop in Treasury yields usually leads to a weaker dollar, influencing trade balances, inflation, and monetary policy decisions worldwide.