Dollar Slides to Three-Year Low on Fed Independence Fears

The U.S. dollar sank to its weakest level in more than three years as growing doubts over the Federal Reserve’s independence prompted investors to dump the greenback. President Donald Trump again called Chair Jerome Powell “terrible” and said he is weighing several replacements, stoking concern that monetary policy could become more politically driven. The dollar index has fallen about 10% since January, set for its worst year in more than two decades. Futures markets now assign a roughly 25% probability that the Fed will cut interest rates at its July meeting and a 92% likelihood of at least one quarter-point reduction by September, according to CME Group data. Speculation centers on possible successors to Powell—Kevin Warsh, Kevin Hassett, Christopher Waller and Treasury Secretary Scott Bessent—who are viewed by investors as more dovish. Risk appetite has also been buoyed by signs the White House is close to sealing several trade deals ahead of a self-imposed July 9 deadline. The shift out of safe havens drove spot gold lower for a third straight session following two consecutive weekly declines, while the yen weakened to around ¥144.6 per dollar.