Market Analysis

Dollar Struggles Near 3-Year Low Amid Trump’s Criticism of Fed Chairman

Mellissa · 22 Apr63K Views

Image Credit: Reuters

The U.S. dollar remained near a three-year low on Tuesday, weighed down by President Donald Trump's continued attacks on Federal Reserve Chairman Jerome Powell, which have further eroded investor confidence in the U.S. economy.

The dollar was close to its decade-low against the Swiss franc and hovered near a 3.5-year low against the euro. Trump intensified his criticism of Powell on Monday, calling him a “major loser” in a post on Truth Social and demanding that interest rates be lowered immediately to avoid an economic downturn.

White House economic adviser Kevin Hassett indicated last Friday that Trump’s team is exploring the possibility of firing Powell, following Trump's earlier statement that Powell’s departure "cannot come fast enough."

This verbal assault came after Powell last week said the central bank should be patient with policy decisions and refrain from lowering rates until there's more clarity on whether U.S. tariffs could cause sustained inflation.

“There’s this terrible stalemate between Trump and Powell, raising concerns that a change at the Fed could lead to panic in the dollar,” said Eric Kuby, chief investment officer at North Star Investment Management.

On the trade front, the ongoing trade war with China added to the uncertainty, as China accused the U.S. of misusing tariffs and warned other countries against striking deals that favor the U.S. over China, increasing anxiety about the potential economic impact of Trump's policies.

The dollar stood at 0.8095 Swiss francs, just above its decade-low of 0.8042 hit the previous day, and traded at 140.99 yen, close to a seven-month low of 140.48. The euro remained steady at $1.1502, after rising to $1.1573 on Monday, its highest since November 2021. Sterling held firm at $1.3376, having surged earlier in the week to $1.3421, its highest since September.

Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia, warned that continued speculation about the Fed’s independence could keep the dollar under pressure. He added that a sell-off in U.S. government bonds or equities might force Trump to stop his attacks on Powell.

The U.S. dollar index, which measures the dollar against six major peers, stood at 98.454 after dipping as low as 97.923 the day before, a level last seen in March 2022. The Australian dollar, sensitive to global risk, reached a four-month high of $0.6436 on Monday and remained near that level at $0.6414.