The greenback’s losing streak shows no signs of letting up, as the US dollar continues its slide amid mounting political pressure and growing uncertainty surrounding former President Donald Trump’s very public battle with the Federal Reserve.
The dollar index, which measures the buck against a basket of major currencies, slipped below key support levels this week, marking its lowest point in over 18 months. Traders are rattled, global markets are tense, and once again, Trump is at the center of the storm.
Trump vs. The Fed: Round 3?
In what’s fast becoming a familiar showdown, Trump has reignited his long-standing feud with the Federal Reserve, accusing it of “destroying the American economy with high interest rates” and “intentionally sabotaging the comeback.” His criticism—blasted across social media and campaign rallies—comes as the Fed holds firm on its rate-tightening strategy, attempting to curb sticky inflation even as growth slows.
Economists argue that while Trump’s rhetoric might appeal to voters feeling the pinch, it undermines confidence in the dollar. “Currency strength hinges on perception of policy stability,” said Carmen Huerta, senior FX strategist at Montclair Capital. “Trump’s outbursts create chaos, and chaos is bad for the dollar.”
Global Confidence Wavers
With China diversifying its reserves, the Euro gaining ground, and oil prices climbing, the dollar is being squeezed from all sides. Emerging markets, already edgy from US rate hikes, are now reacting to the unpredictability injected by Trump’s increasingly combative tone.
Foreign investors—once bullish on US treasuries—are beginning to hedge. Gold is surging, and Bitcoin, strangely enough, is benefitting from the dollar’s weakness. It’s a sign of the times: in the battle of fiat vs. digital, even crypto looks more stable than the current US political landscape.
A Political Gambit?
Some analysts believe Trump is deliberately applying pressure to the Fed to juice markets ahead of the 2025 election. “It’s political theater with economic consequences,” said Rachel Singh, professor of political economics at NYU. “He’s banking on short-term stimulus, even if it means long-term volatility.”
The Fed, meanwhile, remains tight-lipped but unmoved. Chair Jerome Powell reiterated the central bank’s commitment to data-driven decisions, subtly rebuking Trump’s tactics without naming him directly.
What Now?
If Trump’s influence over monetary policy deepens—or if he returns to office and tries to reshape the Fed itself—the dollar could face a more prolonged downturn. For now, investors are watching closely, hedging heavily, and preparing for a wild ride.
One thing is clear: when politics starts messing with the money, markets bleed—and the dollar’s in the ring without a cutman.
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