The value of the US dollar continued to plunge to its lowest level in several years, especially against the yen, euro and Swiss franc. This fall occurred after President Donald Trump openly attacked Federal Reserve Chairman Jerome Powell, thus raising doubts about the independence of the central bank that has been a pillar of US monetary policy stability.
Financial markets are increasingly worried about the Trump administration's aggressive tariff policy actions, which have the potential to trigger a global trade war. This concern caused international investors to start reducing their holdings of US assets, including the US dollar, which was previously considered a safe haven.
Tensions peaked when Trump called Powell "a failure" and demanded that interest rates be lowered immediately. At the same time, the White House is reportedly considering the possibility of firing Powell — a move that is seen as threatening confidence in the stability of US monetary policy.
Although the market expects the probability of an interest rate cut in the near future to be low, expectations for a 90 basis point reduction by the end of the year remain. Barclays raised its euro/dollar forecast to $1.15, but warned that this forecast could change if tensions with the Fed continue to rise.
In this uncertain environment, the US dollar continued to decline in the foreign exchange market. In contrast, currencies such as the Japanese yen and the Swiss franc strengthened. The postponement of trade talks between Thailand and the US, as well as geopolitical tensions such as the conflict in Ukraine, also added pressure on the US dollar and increased global market uncertainty.
