After US President Donald Trump’s criticism of the Federal Reserve raised concerns about its independence, the US dollar index dropped to its lowest level since January 2024, and US stock index futures also retreated.
The dollar weakened against all major currencies on Friday after US National Economic Council Director Kevin Hassett said that President Donald Trump was looking into whether he had the power to fire Federal Reserve Chair Jerome Powell. Traders said the remarks prompted hedge funds to sell the dollar on Monday. Gold, which typically moves inversely to the dollar, hit a record high. US Treasuries fell and the yen strengthened.
Last week, Trump was frustrated that the Federal Reserve had not cut interest rates yet. He posted on social media that Powell “should step down fast enough!” Analysts such as Christopher Wong believe that criticizing the Federal Reserve not only undermines the principle of central bank independence but also risks politicizing US monetary policy, which would deeply unsettle the market.
“To be frank, it’s unbelievable that Powell was fired,” said Mr. Wong, an FX strategist at Oversea-Chinese Banking Corp. in Singapore. “If the credibility of the Fed is questioned, it could seriously undermine confidence in the dollar. The market may continue to demand a political risk premium on dollar assets, especially if this claim is confirmed in the coming weeks or days.”
The decline of US assets indicates that the once-popular “America First” trading strategy – buying assets that perform well when the US does – is reversing. This follows President Trump’s increase in global tariffs, which disrupted the US Treasury market and wiped trillions of dollars off global stock markets. The dollar has come under pressure since the president imposed tariffs, with Bloomberg’s measure of the dollar’s strength weakening for three consecutive weeks.
The euro and the Swiss franc were among the currencies with the biggest gains, with the euro rising to its highest level in three years.
As the trading day progressed, the weakness of the US dollar persisted. The Bloomberg Dollar Spot Index dropped by 0.7% on Monday and also fell by 0.7% last week. All G10 currencies rose against the US dollar, and another safe-haven asset, the Japanese yen, also climbed to its highest level since September. This led to a decline of more than 1% in the Japanese stock index.
“We believe the dollar will remain weak,” wrote Win Thin, global head of market strategy at Brown Brothers Harriman, in a report. “The attacks on the Fed’s independence are intensifying. The admission that the matter is being studied should be taken very seriously and very negatively.”
Chicago Fed President Austan Goolsbee warned against attempts to undermine the independence of central banks. “Economists are almost unanimous that the independence of monetary policy from political interference – that the Fed or any central bank can do its job – is crucial,” Goolsbee said on CBS’s “Face the Nation” on Sunday.
French Finance Minister Éric Lombard warned that if Trump fires Powell, the credibility of the US dollar will be threatened and the US economy will fall into instability.
The US stock market recorded a decline this week as the Federal Reserve refused to support the idea of the market. Mary Daly, president of the Federal Reserve Bank of San Francisco, said that due to inflation risks, the Fed may keep interest rates higher for longer than expected, but it could still cut rates later this year.
Technical analysis:
Gold: We clearly pointed out in the plugin last Thursday that after sweeping the liquidity around 3000, we must pay attention to new long signals. Our plugin also provided a yellow alert area. As a result, after the price broke below 3304, it came back up to break through 3310 and further rose to 3370, achieving a 10:1 risk-reward ratio. For today, we continue to watch for opportunities to retrace to the new demand zone and keep an eye out for long signals. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the chart, please contact V: Hana-fgfg and note “666” in the message.
Nasdaq: The price is expected to continue its short-term volatile and downward trend. We still recommend waiting for a bullish signal after the liquidity sweep to attempt a trade. Meanwhile, as we previously anticipated, the price should not fall below the 16,000 mark in the short term. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the chart, please contact V: Hana-fgfg and note “666” in the message.
Crude oil: As Trump has postponed the full reciprocal tariffs for 90 days, the pressure on oil prices from recession concerns has been greatly alleviated. Within the day, we should simultaneously pay attention to the pullback confirmation signal after the momentum breaks through; as well as the new demand zone signal that emerges after the liquidity below is swept away. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and leave a message with “666”.
Today’s key financial data and events to focus on:
At 20:30, Charles L. Evans, President of the Federal Reserve Bank of Chicago, will be interviewed by CNBC.
22:00 US Conference Board Leading Index for March
