The US dollar experienced broad weakness, hitting a three-year low, primarily driven by concerns regarding the Federal Reserve’s independence amid presidential pressure for interest rate cuts and escalating trade tensions. The dollar’s decline was most pronounced against the euro, yen, and Swiss franc.
- The US dollar index fell to around 98.6, a three-year low.
- Concerns over the Federal Reserve’s independence are weighing on sentiment.
- President Trump renewed threats to dismiss Fed Chair Jerome Powell, pressuring the Fed to cut interest rates.
- Escalating trade tensions and policy uncertainty under the Trump administration contribute to market unease.
- Chicago Fed President Austan Goolsbee warned tariffs could cause US economic activity to “fall off” by summer.
- Trade talks are ongoing with some partners, but no breakthrough or direct negotiations with China are evident.
This suggests a challenging period for the US dollar. Concerns about the central bank’s autonomy and the potential negative impact of trade policies on the economy are creating downward pressure on the currency. The lack of progress in resolving trade disputes further exacerbates the situation, making the dollar vulnerable to further declines if these issues persist.