Dollar Plunges to Three-Year Low Amid Trump’s Fed Pressure and Asia’s Resurgence
Dollar Plunges to Three-Year Low Amid Trump’s Fed Pressure and Asia’s Resurgence
The U.S. dollar has plunged to its lowest point in three years this week, signaling a significant shift in global currency markets. On Thursday, the dollar index registered its weakest level since March 2022, primarily driven by mounting political pressure on the Federal Reserve and a surge in confidence across Asian economies.
U.S. President Donald Trump has intensified his public criticism of Fed Chair Jerome Powell, advocating aggressively for substantial interest rate cuts. Adding to the market’s unease, a recent Wall Street Journal report suggested President Trump might name Powell’s successor sooner than anticipated, fueling speculation that a rate cut could be implemented as early as July. President Trump reiterated his stance this week, arguing that current high interest rates are detrimental to the American economy and should be lowered by two to three percentage points.
Beyond domestic policy, the dollar’s appeal as a safe-haven asset has diminished following a perceived stabilization in geopolitical tensions. A U.S.-brokered ceasefire between Israel and Iran appears to be holding, and President Trump has hinted at renewed nuclear talks with Iran set for next week. These developments have bolstered “risk-on” sentiment, encouraging investors to seek higher returns outside the dollar.
Concurrently, Asian currencies are experiencing a robust rally. The Chinese yuan reached a seven-month high after local officials indicated forthcoming stimulus measures, including consumer subsidies slated for launch in July. The Taiwan dollar led the gains, with the USDTWD pair seeing a 1% plunge. The Japanese yen also strengthened ahead of Tokyo’s crucial inflation report, which could influence the Bank of Japan’s next move, especially after recent hawkish comments from the BOJ this week. Elsewhere, the South Korean won, Australian dollar, Singapore dollar, and Indian rupee all appreciated, each gaining between 0.2% and 0.4% against the weakening greenback.
This confluence of factors—growing expectations of U.S. monetary easing and a strong wave of positive sentiment across Asia—is prompting traders to pivot away from the dollar. The current trend suggests a potential turning point in global foreign exchange dynamics, favoring regional currencies as investors chase new opportunities.
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