The U.S. dollar is in sharp decline, hitting its lowest level in more than three years as investor confidence erodes amid renewed concerns over the Federal Reserve\u2019s independence. President Donald Trump\u2019s latest verbal assault on Fed Chair Jerome Powell \u2014 calling him \u201cterrible\u201d \u2014 has intensified market anxiety, especially with speculation mounting that Trump may replace him with a more compliant figure.<\/p>\n\n\n\n
The greenback has now fallen 10% year-to-date, on track for its worst performance since 2003. A basket of major global currencies is rising against it, with the euro now pushing toward $1.20. This latest retreat comes despite a temporary bump earlier in the week from safe-haven flows linked to Middle East tensions.<\/p>\n\n\n\n
Traders are pricing in a 25% chance of a rate cut at the Fed\u2019s July meeting, up from just 12.5% a week ago. The shift follows dovish remarks from Fed Governor Michelle Bowman \u2014 a Trump appointee and now the Fed\u2019s top banking supervisor \u2014 who suggested the time for cuts is drawing closer. Her comments, combined with political pressure from the White House, have fueled fears that the central bank’s decisions are increasingly being influenced by politics rather than economic fundamentals.<\/p>\n\n\n\n
“We are short the dollar in this environment,” said Kaspar Hense of RBC BlueBay Asset Management. “There’s an erosion of institutions that\u2019s not fully priced in yet.” He added that a Trump-backed candidate such as Kevin Hassett or Treasury Secretary Scott Bessent could trigger further volatility if appointed as Fed chair.<\/p>\n\n\n\n
Reports suggest that European Central Bank regulators are already stress-testing their exposure to U.S. dollars, wary of being cut off from Fed liquidity under a more unpredictable administration. Meanwhile, in Germany, concerns about dollar reliability have reignited calls to repatriate some of the Bundesbank\u2019s gold reserves stored in the U.S.<\/p>\n\n\n\n
According to a recent OMFIF survey, 70% of central bank reserve managers now view the U.S. political climate as a deterrent to holding dollar assets \u2014 more than double the proportion a year ago. The result reflects rising doubts over the stability and credibility of American institutions, particularly the Federal Reserve.<\/p>\n\n\n\n
Even amid geopolitical unrest, such as the Israel-Iran ceasefire and oil price swings, the dollar has failed to regain its traditional safe-haven appeal. \u201cThe dollar\u2019s muted reaction to oil volatility is another sign that its reputation as a safe-haven asset is slipping,\u201d noted Seema Shah of Principal Asset Management.<\/p>\n\n\n\n
With the U.S. political environment becoming a major risk factor, analysts are reworking their near-term currency forecasts. ING now sees $1.20 for the euro as realistic, contingent on further deterioration in dollar sentiment.<\/p>\n\n\n\n
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Trump’s attacks on Jerome Powell and hints at replacing him unsettle markets The U.S. dollar is in sharp decline, hitting its lowest level in more than three years as investor confidence erodes amid renewed concerns over the Federal Reserve\u2019s independence. President Donald Trump\u2019s latest verbal assault on Fed Chair Jerome Powell \u2014 calling him \u201cterrible\u201d […]<\/p>\n","protected":false},"author":10772,"featured_media":12236,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[1901,1903,1900,662,39,25,1073,1902,1899,1898],"class_list":{"0":"post-12235","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance","8":"tag-central-bank-trust","9":"tag-currency-market-forecast","10":"tag-dollar-safe-haven","11":"tag-fed-independence","12":"tag-fed-rate-cut","13":"tag-jerome-powell","14":"tag-michelle-bowman","15":"tag-omfif-survey","16":"tag-trump-fed-chair-replacement","17":"tag-u-s-dollar-decline"},"_links":{"self":[{"href":"https:\/\/thetimesfinancial.com\/index.php?rest_route=\/wp\/v2\/posts\/12235","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thetimesfinancial.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thetimesfinancial.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thetimesfinancial.com\/index.php?rest_route=\/wp\/v2\/users\/10772"}],"replies":[{"embeddable":true,"href":"https:\/\/thetimesfinancial.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12235"}],"version-history":[{"count":1,"href":"https:\/\/thetimesfinancial.com\/index.php?rest_route=\/wp\/v2\/posts\/12235\/revisions"}],"predecessor-version":[{"id":12237,"href":"https:\/\/thetimesfinancial.com\/index.php?rest_route=\/wp\/v2\/posts\/12235\/revisions\/12237"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thetimesfinancial.com\/index.php?rest_route=\/wp\/v2\/media\/12236"}],"wp:attachment":[{"href":"https:\/\/thetimesfinancial.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12235"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thetimesfinancial.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12235"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thetimesfinancial.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12235"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}