FX.co ★ Dollar Languishes at 3-Year Low

On Tuesday, the dollar index hovered around 98.4, following a dip to a fresh three-year low in the preceding session. This decline was spurred by concerns regarding the Federal Reserve’s autonomy and the economic implications of an ongoing global trade war. President Donald Trump advocated for an immediate interest rate reduction by the Fed, criticizing Chair Jerome Powell’s preference to first assess the impact of tariffs on inflation. Speculation from the White House about potentially removing Powell exacerbated fears of US monetary policy becoming politically influenced, which could damage the Fed’s credibility and diminish investor trust in the dollar. Concurrently, markets reacted with disappointment to the stagnating trade negotiations, noting China's accusations against the US of tariff misuse and its warnings to other nations about engaging in agreements unfavorable to them. This month, the dollar has experienced a nearly 6% decline, with the most significant drops observed against the euro, yen, and Swiss franc.