Dollar Wobbles Near Three-Year Low as Trump-Fed Clash Deepens

Trump vs. Powell: Why the Dollar Is Losing Its Safe-Haven Shine

The U.S. dollar ticked higher early Tuesday but stayed pinned near a three-year low, weighed down by escalating tensions between President Donald Trump and Federal Reserve Chair Jerome Powell.

By 04:45 ET (08:45 GMT), the Dollar Index inched up 0.2% to 98.190, recovering slightly after Monday’s slide to levels last seen in March 2022. Trump's renewed criticism of Powell for holding off on rate cuts is fueling fears over the Fed’s independence and denting the dollar’s global appeal.

“Trump’s attacks on the Fed threaten the dollar’s safe-haven status,” analysts at ING warned, adding that blame-shifting ahead of a possible recession is only amplifying market unease.

Euro, Yen Ride Dollar Weakness

The euro eased 0.1% to 1.1500 after briefly reaching a three-year high against the greenback. Despite the European Central Bank’s recent rate cut, the euro remains buoyed as liquidity flows out of U.S. assets.

“Fundamentals aren't driving EUR/USD higher — it’s all about dollar flight,” ING said, noting the pair could climb toward 1.20 if the trend holds.

Meanwhile, the Japanese yen strengthened sharply. USD/JPY slipped 0.2% to 140.51, after breaching the symbolic 140 barrier for the first time since September. Investors rushed toward the yen, seeking shelter from growing uncertainty.

"The yen looks poised for more gains as Fed independence fears escalate," ING noted. China Pushes Back as Yuan Holds Line

The Chinese yuan also saw action, with USD/CNY rising 0.3% to 7.3138. Despite the People’s Bank of China setting a stronger-than-expected fix, the yuan struggled as Beijing issued a sharp warning to nations weighing U.S. trade deals.

The Chinese Ministry of Commerce accused Washington of using tariffs and financial coercion to isolate China, deepening rifts in the already tense U.S.-China trade relationship.