US Dollar Index refreshes three-year low near 97.00 as Trump attacks Fed’s independence
- The US Dollar Index slumps to near 97.00 as Trump-Powell policy tensions have dampened its safe-haven demand.
- Fed’s Powell that the central bank needs more time to gauge that tariff impact on inflation before considering interest rate cuts.
- The Israel-Iran ceasefire has also diminished USD’s safe-haven demand.
The US Dollar (USD) faces a sharp selling pressure on Thursday as United States (US) President Donald Trump lashed out on Federal Reserve (Fed) Chair Jerome Powell again for arguing in favor of holding interest rate cuts in the upcoming policy meetings in his semi-annual testimony before the Senate on June 24-25.
The move has led to a sharp decline in the US Dollar, sending the US Dollar Index (DXY) to near 97.00, the lowest level seen in over three years.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.34% | -0.35% | -0.55% | -0.30% | -0.37% | -0.22% | -0.36% | |
| EUR | 0.34% | 0.05% | -0.24% | 0.07% | 0.00% | 0.13% | 0.00% | |
| GBP | 0.35% | -0.05% | -0.30% | 0.02% | -0.04% | 0.10% | -0.04% | |
| JPY | 0.55% | 0.24% | 0.30% | 0.27% | 0.22% | 0.33% | 0.22% | |
| CAD | 0.30% | -0.07% | -0.02% | -0.27% | -0.05% | -0.01% | -0.06% | |
| AUD | 0.37% | -0.01% | 0.04% | -0.22% | 0.05% | 0.05% | 0.00% | |
| NZD | 0.22% | -0.13% | -0.10% | -0.33% | 0.00% | -0.05% | -0.05% | |
| CHF | 0.36% | -0.01% | 0.04% | -0.22% | 0.06% | -0.01% | 0.05% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
US President Trump called Powell “terrible” for not lowering interest rates and confirmed that he has three or four names in mind out of which he will appoint one for his replacement, Reuters reported.
Meanwhile, the Wall Street Journal reported that Powell’s successor could be chosen as early as in Summer. According to the report, Trump might consider former Fed Governor Kevin Warsh and National Economic Council Director Kevin Hassett. Treasury Secretary Scott Bessent is being presented to Trump by both men's associates as a possible contender. Treasury Secretary Scott Bessent is being pitched to Trump by allies of both men as a potential candidate.
Other candidates include former World Bank President David Malpass and Fed Governor Christopher Waller.
In the two-day testimony, Jerome Powell stated that the central bank is well positioned to “wait to learn more about the likely course of the economy before considering any adjustments to our policy stance”. He warned that the tariff-driven inflation could prove to be “persistent” and “not a one-time increase”.
This week, the US Dollar has remained on the back foot as the announcement of the ceasefire between Isreal and Iran diminished its safe-haven demand.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
