The USDX dollar index has had a rough few weeks, and there is further risk as Trump turns his focus to the Fed Chair Jerome Powell’s job.
USDX – Weekly Chart
The USDX broke lower through the key 100 level but has supported a little lower at 99.62. It is vital for the index to find strength here, or further volatility can appear in markets.
After rocking the financial markets with tariffs, the U.S. President has been commenting on the future of the central bank head. Powell has been talking publicly about the tariffs causing inflation, which will hurt Trump’s desire to cut interest.
There is uncertainty over Trump’s ability to remove the head of the central bank. However, Trump said defiantly:
“If I want him out, he’ll be out of there real fast, believe me.”
The recent upheaval in financial markets threatens the dollar’s status as the world’s reserve currency. The President added that he was “not happy” with Powell and said he was “playing politics” with interest rates.
“We have a Federal Reserve chairman that is playing politics. Somebody that I’ve never been very fond of. … Interest rates should be down now”.
The Wall Street Journal reported that Trump has been discussing firing the Fed Chair for months. He also made a strong statement on social media about Powell’s recent comments, noting the European Central Bank’s plan to cut interest rates for the 7th time. He said Powell was “too late and wrong” and should have lowered rates long ago.
Some European and U.S. markets are closed on Friday for the Easter holidays and may see quieter trading.
There is hope for the dollar at current support, and traders should keep an eye on trade negotiations for a potential rally. Several Asian countries have started talks with the U.S., but China has not. If they remain stubborn, the economy and the dollar could continue struggling. China was unhappy with the public attention to tariffs and the President’s “disrespectful” tone.
Japanese delegates were at the White House this week, but Trump said there was “no rush” to announce any deals at the summit.
