Dollar slumps as Trump undermines Powell; euro, sterling gain
The U.S. dollar slumped to multi-year lows Thursday, as a renewed attack on Federal Reserve Chair Jerome Powell by President Donald Trump raised concerns about the future independence of the U.S. central bank.
At 04:30 ET (08:30 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, fell 0.6% to 96.682, dropping to its lowest since early 2022.
Dollar slumps as Trump undermines Powell
Fed Chair Powell reiterated his cautious stance on the second day of his two-day testimony before Congress during the prior session, reiterating that interest rate cuts would wait until the inflationary impact of tariffs is clarified, noting that tariffs could push up prices beyond a one-time increase.
This prompted more criticism from U.S. President Donald Trump, calling Powell "terrible" for not lowering interest rates sharply.
According to a Wall Street Journal report, Trump had toyed with the idea of selecting and announcing Federal Reserve Chair Jerome Powell’s replacement by September or October, aiming to undermine his position given his term is scheduled to end in May 2026.
In Europe, EUR/USD surged 0.4% to 1.1706, climbing to its highest level since September 2021.
GBP/USD climbed 0.6% to 1.3748, reaching its highest since January 2022, with sterling benefiting as investors question the dollar’s dominant reserve currency status.
In Asia, USD/JPY traded 0.9% lower to 143.97, with the Japanese yen benefiting from the dollar selloff, as attention turns towards Friday’s Tokyo inflation data.
The print is likely to factor into the Bank of Japan’s plans to raise interest rates, with a recent uptick in price pressures driving up bets that a hike was imminent.
Source: Reuters
