Dollar Rebounds Amid Trade Tension Eases and Fed Reassurance

The U.S. dollar rebounded on Wednesday, fueled by de-escalation in U.S.-China trade tensions and President Trump's reassurance over Federal Reserve leadership. Market responses showed volatility due to ongoing uncertainty. However, the dollar gained strength against major currencies as prospects of trade negotiations provided a temporary boost.

The U.S. dollar showed signs of recovery on Wednesday, as trade tensions between the U.S. and China appeared to ease and President Trump retreated from firing Federal Reserve Chairman Jerome Powell. Investors were relieved, resulting in the dollar strengthening against the euro and Swiss franc.

Uncertainties about the Federal Reserve's independence emerged following Trump's verbal criticisms of Chairman Jerome Powell for maintaining interest rates. However, Trump's recent comments suggested a change in tone, indicating no immediate intention to dismiss Powell, reassuring the market.

The dollar index initially saw a rise in Asian trading hours, although it later steadied. The recent developments, including potential trade deals, indicate a cautious optimism in financial markets, albeit with lingering concerns about U.S. economic policies and their implications on global growth.

(With inputs from agencies.)