The ICE USD Index - a measure of the strength of the greenback against a basket of major currencies - plummeted by more than 1% on April 21, down to 97.923 points, the lowest level since March 2022.
The US dollar also suffered a sharp decline against the euro, British pound, Japanese yen and Swiss francs, even the Russian ruble, falling below 80 rubles/1 USD, something that has not happened since June 2024.
The pressure on the USD comes from a series of countervailing tax policies of President Donald Trump, announced on February 2 targeting many global partners. Not stopping there, investors were even more confused when the US President publicly attacked the Chairman of the US Federal Reserve (Fed) Jerome Powell, who was appointed by him.
In a harsh speech on April 17, Mr. Trump criticized Chairman Powell for being too slow in cutting interest rates, even not ruling out the possibility of removing him. If I want him to leave, he will leave immediately, President Trump said.
The threat came after Mr. Powell warned that new tariffs would likely increase inflation in the short term and said there was no basis to cut interest rates at the present time.
White House economic adviser Kevin Hassett later revealed that the administration is reviewing the legality of sacking the Fed chairman before his term expires, a move that could break the principle of independence that is the foundation of the US central bank.
Although Mr. Powell announced that he would not resign and affirmed that "the independence of the Fed is a matter of law", the market still reacted strongly. Major stock indexes such as Dow Jones, Nasdaq and S&P 500 all fell more than 3% in the same session.
Adam Crisafulli, an analyst at Vital Knowledge, commented on CNBC: Investors are facing a new macro concern: Mr. Trump threatens the independence of the Fed.
Meanwhile, Krishna Guha, EVcore ISI Vice President, warned that any effort to fire Mr. Powell could lead to a strong sell-off in the US stock market.
Jerome Powell, appointed by President Trump in 2018 and reappointed under President Joe Biden in 2022, remains in office until May 2026. However, the underground war between the two most powerful economically and financially powerful figures in the US is pushing the USD into the center of the storm.
