Dollar's Decline: Market Dynamics and Fed Concerns Shake Currency

The U.S. dollar has plunged to a more than three-year low, despite global shares reaching record highs. Market fears about the Federal Reserve's independence have contributed to a shift in investor sentiment, causing the U.S. dollar index to drop 0.5% in one session and more than 10% for the year.

Increased speculation over President Trump's plans to replace Chair Jerome Powell ahead of his term's end has weighed heavily on the dollar. Powell's recent congressional testimony emphasized cautious rate adjustments amid anticipated tariff-induced price increases. Analysts predict that such political moves could destabilize investor confidence in central bank operations.

Additionally, European shares, oil prices, and U.S. Treasury yields are reflecting the broader market's response, with European shares slightly up and oil prices recovering from recent declines. Meanwhile, gold prices dipped slightly, mirroring cautious investor behavior as key trade discussions with Washington loom.

(With inputs from agencies.)