Dollar Plunges Amid Trump’s Plans to Undermine Fed Independence

The U.S. dollar fell sharply in early Monday trading as investor confidence in the American economy waned, driven by President Donald Trump’s controversial plans to restructure the Federal Reserve—raising concerns over the central bank’s independence.

White House economic adviser Kevin Hassett confirmed that Trump and his team are still considering the possibility of firing Fed Chair Jerome Powell. This came just a day after Trump publicly criticized Powell, stating his removal “couldn’t come fast enough” while urging the Fed to lower interest rates.

The dollar dropped to a three-year low against the euro and hit a seven-month low against the Japanese yen. It also fell 0.9% against the Swiss franc during the early Asian session, amid deepening investor distrust toward the greenback. Market activity remained subdued due to Easter Monday holidays in Australia and Hong Kong, following widespread closures on Good Friday.

Vishnu Varathan, Head of Economics and Strategy for Asia at Mizuho Bank, commented: “Powell doesn’t serve at the president’s pleasure, so Trump can’t simply fire him. Removing him would require a formal legal process—which sets a high bar. However, can Trump initiate actions that challenge the Fed’s perceived independence? Absolutely.”

He added, “Even without actually removing Powell, creating the impression that the Fed’s autonomy is under threat could be enough to destabilize markets.”

The euro climbed to a three-year high of $1.1476, while the dollar slipped 0.58% to 141.40 yen. The British pound also surged, reaching $1.3339—its highest since early October. Meanwhile, the Australian dollar hit a two-month high of $0.6396.

Trump’s sweeping tariffs and unpredictable trade policies have rattled global markets, casting a shadow over the U.S. economic outlook. This growing uncertainty has prompted investors to pull capital out of U.S. assets, further pressuring the dollar.

The U.S. Dollar Index, which measures the currency against a basket of major peers, dropped to a three-year low at 98.623 on Monday. The dollar also slid 0.9% against the Swiss franc to 0.8119, while the New Zealand dollar gained 0.46% to reach 0.5964.

Elsewhere, the Chinese yuan edged up by 0.1% to 7.2966 per dollar, and Bitcoin rose over 2% to reach $86,838.

In China, the central bank kept its benchmark lending rates unchanged for the sixth consecutive month, aligning with market expectations. Investors anticipate further stimulus measures amid the intensifying U.S.–China trade tensions.