Dollar's Fragile Footing Amid Fed Chair Controversy

The dollar found itself on unstable ground Thursday, following overnight declines spurred by rumors about U.S. President Trump's possible dismissal of Federal Reserve Chair Jerome Powell. Trump's denial of such plans did little to ease market fears.

Trump's critique of Powell continued, as he reproached him for failing to reduce interest rates. Investors are anxious that removing Powell before his term concludes in 2026 could undermine the U.S. financial system's credibility and erode confidence in the dollar as a safe-haven asset.

Mahjabeen Zaman of ANZ warns that a more dovish Fed might usher in inflation and negative real yields on Treasuries. Trump remains vocal about lowering rates, further fueling market volatility. In the backdrop, global investors eye tariff deadlines and Japan's political landscape.

(With inputs from agencies.)