Dollar Nears Multi-Year Lows Against Euro and Swiss Franc Amid Trump’s Fed Criticism
April 22, 2025 | By Smart Money Mindset
The U.S. dollar is hovering around multi-year lows against both the euro and the Swiss franc, following a series of criticisms leveled at the Federal Reserve by President Donald Trump. This news comes as investors remain cautious ahead of key U.S. inflation data and ongoing trade discussions.
Trump Targets the Federal Reserve
On Monday, President Trump intensified his rhetoric against Federal Reserve Chairman Jerome Powell, labeling him a "major loser" and urging for immediate interest rate cuts to avoid triggering an economic slowdown. Analysts warn that such attacks could undermine the independence of the Federal Reserve, crucial for maintaining confidence in the dollar as a global reserve currency.
Adam Button, the chief currency analyst at ForexLive, highlighted the potential repercussions of Trump’s actions, stating, "The firing of Jerome Powell would be catastrophic for the U.S. dollar and confidence in U.S. capital markets in general." He emphasized that market participants are hoping for a more stable approach to economic policy that would support continued growth.
Market Response to Trade Relations
Adding to the dollar’s troubles were comments from Thailand’s Prime Minister that signaled a delay in upcoming trade talks with the United States, set to begin this Wednesday. The market reacted negatively, with concerns about trade tensions and U.S. tariffs potentially igniting a global trade conflict.
Francesco Pesole, a strategist from ING, commented on the market’s outlook, noting that the "current worst-case scenario for the greenback is that Powell caves in and delivers an emergency rate cut," although he deemed this unlikely.
Currency Movements and Global Economic Indicators
As the dollar struggled, it saw a slight dip of 0.03% against the Japanese yen, trading at 140.820, after falling below the critical 140 mark for the first time since mid-September. It edged up 0.57% to 0.8138 Swiss francs, yet remained close to a decade-low of 0.8042 reached previously.
Meanwhile, the euro slipped by 0.38% to $1.1467 after reaching $1.1573 on Monday, marking its highest point since November 2021. Shusuke Yamada, a forex strategist at Bank of America Japan, highlighted that underlying dynamics differ for these currencies, cautioning that the yen’s rise might be more prone to volatility compared to the euro.
Fed Policy Outlook
Currently, money markets are pricing in less than a 10% chance of a rate cut by the Federal Reserve in May. According to Barclays, confidence in the euro/dollar forecast has strengthened, with projections now at $1.15, though adjustments may be necessary as current situations unfold.
Adding to the geopolitical climate, China warned on Monday against the U.S. approach to tariffs, indicating caution to other countries considering broader economic agreements with Washington.
Conclusion
As the dollar grapples with significant headwinds amidst tensions between the U.S. administration and the Federal Reserve, market watchers will continue to pay close attention to economic data releases and geopolitical developments. The outcome of upcoming trade discussions and the potential response from U.S. monetary policy will be critical in determining the dollar’s trajectory in the coming weeks.
For ongoing analysis and updates, stay connected with Smart Money Mindset.
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