Dollar's Decline Amid Fed Independence Concerns and Tariff Tensions

The dollar hit multi-year lows against the euro and Swiss franc as concerns over the U.S. Federal Reserve's independence rattled investors. Reports suggested that President Donald Trump considered replacing Federal Reserve Chair Jerome Powell by fall, stirring fears of a politically motivated decision that could erode the Fed's credibility.

Market responses were quick, with speculation emerging that an early announcement of Powell's successor might recalibrate rate expectations. Analysts highlighted the weakening dollar's potential impacts, as ongoing tariff policies further complicated the economic landscape.

JPMorgan cautioned that rising tariffs could slow U.S. growth and increase inflation, elevating the chances of a recession. Meanwhile, Europe's economic outlook brightened with significant investments in defense and infrastructure, further boosting the euro's standing and challenging the dollar's reserve currency status.

(With inputs from agencies.)