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(Bloomberg) -- A gauge of the dollar touched its lowest mark in a month as traders awaited a Group-of-Seven meeting this week for any signs that the Trump administration is seeking a weaker US currency.

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The Bloomberg Dollar Spot Index dropped as much as 0.6% on Wednesday to its softest intraday level since April, then pared losses late in New York trading. Options markets reflected the currency’s decline, with one-month sentiment turning the most bearish in five years, as concerns over the US budget deficit lingered.

Selling of the dollar accelerated after South Korea’s finance ministry said that foreign-exchange discussions with the US are ongoing, but that nothing has been decided yet. Japanese Finance Minister Katsunobu Kato said last week he will seek an opportunity for currency talks with his US counterpart Scott Bessent.

Investor worries that foreign-exchange may “creep into the bilateral talks” at the G-7 summit are helping drive the dollar lower alongside persistent focus on US fiscal policy, said Shaun Osborne, chief currency strategist at Scotiabank.

In South Korea, local media reported that the direction of the local currency was discussed at the ongoing trade negotiations with the US. That led to a spike higher in the won Wednesday, which advanced as much as 1.8% to 1,368.50 per US dollar — its strongest mark since October.

Washington is unlikely to “aggressively pursue” a weak dollar, but the greenback will end up declining as the nation reaches agreements with its trading partners to lower tariffs, Citigroup Inc. currency strategists led by Osamu Takashima wrote in a note.

Chris Turner, head of FX strategy at ING, said that the language used to describe currency policy at the G-7 nations meeting is highly likely to remain unchanged, yet any tweaks “could prove incendiary and hit the dollar.”

What Bloomberg Intelligence Says...

“The revival of the de-dollarization case means that there’s no room for US debt complacency, but we see the extent of any structural- or fiscal-driven dollar slide as a function of the economy as well. Real US economic indicators have held relatively well so far, but the turn lower seen in a growing majority of recent surveys could spill over to the hard data and rekindle recession talks.”

- Audrey Childe-Freeman and Chunyu Zhang, BI strategists

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