Dollar Tumbles as Trump Pressures Fed Over Rate Cuts

Editorial : Reda El Ghazal

The U.S. dollar suffered its worst decline in three years as President Trump’s public assault on Federal Reserve independence sent shockwaves through global markets. In an extraordinary social media outburst, the president branded Fed Chair Jerome Powell a “major loser” while demanding immediate interest rate cuts – rhetoric that rattled investors already nervous about political interference in monetary policy. The dollar index plunged to 97.923, its weakest since March 2022, with particularly sharp drops against traditional safe havens like the Swiss franc and Japanese yen.

Market turmoil intensified as White House officials confirmed they were exploring options to remove Powell, despite legal experts noting the significant procedural hurdles. The political uncertainty combined with thin holiday trading to create perfect conditions for a selloff, dragging the S&P 500 down more than 2% as tech stocks bore the brunt of the selling pressure. Analysts warned that sustained attacks on Fed independence could have lasting consequences, potentially hampering the central bank’s ability to respond effectively to future economic crises.

The dollar’s weakness reflected growing investor anxiety, with the euro breaking through $1.15 for the first time in nearly three years while yen positions hit record highs. Market strategists emphasized that while Trump may lack direct authority to fire Powell, the relentless pressure campaign risks eroding confidence in the Fed’s policymaking autonomy – a cornerstone of global financial stability. As the standoff continues, traders are bracing for further volatility, with many questioning whether political considerations might eventually override economic fundamentals in setting U.S. monetary policy.