USD: Trump's rollercoaster ride – Commerzbank

FXStreet Insights Team FXStreet

Things got really exciting again yesterday afternoon. First, a major US media outlet reported that Donald Trump had told Republican lawmakers that he was going to fire Federal Reserve Chairman Jerome Powell. Soon afterwards, Bloomberg quoted an unnamed White House official as saying that the dismissal was imminent. Other media outlets reported that Trump had presented a draft dismissal letter on Tuesday. These precise reports marked a new level of escalation. The US Dollar (USD) suffered significant losses, with EUR/USD breaking through the 1.17 level again, Commerzbank's FX analyst Michael Pfister notes.

Trump-Powell tensions rattle USD, then recede

"However, as has often been the case recently, the excitement did not last long. Shortly before 6 p.m. German time, came the denial. Trump announced that he had no plans to fire Powell. He left himself an out, saying that if the investigation into the Fed's renovation revealed misconduct, he would consider dismissal; otherwise, he called it 'highly unlikely'. Following this news, the weakness of the USD disappeared as quickly as it had come."

"Trump appears to be testing the limits of what he can do with regard to the Fed's independence. Although he blamed Republican parliamentarians for the escalation, he described himself as 'more conservative'. Still, he is doing everything he can to undermine Powell further. The verbal attacks are continuing to escalate, with Trump's entourage recently focusing on the Fed's renovation project and accusing Powell of fraud in this regard. Even if Trump ultimately refrains from dismissing Powell, he emphasised yesterday that he is only considering 'low interest rate' candidates for the position. This suggests that the Fed's monetary policy is likely to remain under pressure in the coming year, even without a formal dismissal."

"Another point to note is that there were new developments overnight regarding the US president's second favourite topic: tariffs. Trump announced that he would impose a fixed tariff of 10 or 15% on goods from the remaining 150 countries that have not yet received a letter. This is slightly less than the 15–20% suggested last week. It remains to be seen how long these figures will hold this time."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD appears well offered near 1.3160

GBP/USD builds on Tuesday’s losses, although it now manages to pick up some pace and bounce off earlier multi-month troughs near 1.3140. The Greenback’s solid performance and continued political turmoil in the UK are keeping Cable under persistent pressure, with little sign of a meaningful recovery.

EUR/USD trims losses, hovers around 1.1350

EUR/USD now regains some composure and rebounds to the 1.1350 zone on Wednesday, partially reversing the prior pullback to fresh yearly lows near 1.1320. Meanwhile, spot remains on the back foot as the US Dollar continues to draw support from hawkish Fed expectations and uncertainty over the outcome of US-Iran peace negotiations.

Gold puts $4,000 to the test, new yearly lows

Gold accelerates its decline and gyrates around the key $4,000 mark per troy ounce on Wednesday, its lowest level since November 2025. In the meantime, tighter-for-longer Fed expectations and a broadly firmer US Dollar continue to weigh on the yellow metal, while uncertainty surrounding a potential US-Iran peace agreement has done little to revive demand for the safe haven space.

Crypto Today: Bitcoin, Ethereum, XRP trade under pressure as September Fed rate-hike odds increase

Bitcoin is trading between $62,000 and $63,000 at the time of writing on Wednesday, weighed down by headwinds stemming from macroeconomic uncertainty and geopolitical tensions in the Middle East.

5.90% to 5.45%: Why the Pound ignored the bond market’s relief rally

Keir Starmer resigned on Monday, and the Pound barely moved. That near-silence is the tell. Sterling's real driver these past four months has not been the prime minister, nor the left-leaning frontrunner lining up to replace him, but the long end of the gilt curve, which answers to a force no British politician controls.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.