US Dollar Index Hits Three-Year Lows as Trump Undermines Fed Confidence

US Dollar Index (DXY) Falls to Three-Year Lows Near 97.00 as Trump Targets Powell

The US Dollar Index (DXY) has extended its losing streak to six consecutive sessions, falling to near 97.00, levels not seen since March 2022. The sharp decline comes amid growing political pressure on the Federal Reserve, with President Donald Trump's public attacks on Fed Chair Jerome Powell undermining investor confidence in the central bank’s independence.

Trump's Criticism of Powell Fuels Dollar Sell-Off

Markets reacted negatively to Trump’s latest outbursts, where he insulted Fed Chair Powell and hinted at replacing him as early as September or October. Trump's remarks followed Powell's hawkish testimony to Congress, where the Fed chair maintained a cautious stance on rate cuts despite rising inflation risks linked to US tariffs.

This political interference has shaken global investor confidence, with traders fearing a loss of central bank credibility and autonomy, accelerating the “Sell America” sentiment.

JP Morgan Warns of Potential Stagflation

Adding to bearish sentiment, JP Morgan published a note warning of a 40% chance of economic contraction in the second half of the year, citing stagflationary pressures from Trump’s unpredictable trade policies and tariff threats. According to the bank, these policies could cause inflation to rise while economic growth slows—posing a major threat to the USD.

Middle East Ceasefire Shifts Market Focus to Economic Risks

With geopolitical tensions easing after the Israel-Iran ceasefire, investors are refocusing on US macroeconomic fundamentals. Uncertainty over trade policy, the direction of Fed policy, and political interference are compounding downside risks for the Dollar.

For updated insights on the US Dollar Index, Fed policy outlooks, and global macro trends, visit Tredu.com.