Dollar in Distress: Trade Wars and Fed Influence Shake Currency Markets

The dollar struggles against yen, euro, and franc as Trump's criticisms of the Federal Reserve spark concerns over its independence. With threats of a global trade war looming, analysts worry about the greenback's status as a reserve currency. Trump's pressure on the Fed for rate cuts highlights market instability.

The dollar hit a new low against the yen and struggled against the euro and Swiss franc as President Donald Trump's criticism of the Federal Reserve raised concerns over the central bank's independence. Market concerns about U.S. tariffs and potential global trade war added to this financial turbulence.

Analysts feared for the dollar's standing as a reserve currency, worrying about overexposure to U.S. assets. The dollar's value dropped further after Thailand's prime minister postponed trade talks with Washington. Trump's demand for an immediate rate cut from Fed Chief Jerome Powell intensified uncertainty.

Trump's criticisms followed Powell's remarks about taking a patient approach to policy decisions. Barclays adjusted its euro/dollar forecast anticipating a low likelihood of Powell's removal. Meanwhile, China accused the U.S. of tariff misuse, complicating the trade relationship between the two largest economies.

(With inputs from agencies.)