Crisis of Confidence: Trump Comments Shake the Dollar on Global Markets

The U.S. dollar faces a crisis of confidence, with its value dropping amid President Trump's comments. The euro and yen rise, reflecting traders' reactions to potential currency interventions. Analysts cite erratic U.S. policies as reasons for declining dollar confidence, overshadowing strong economic fundamentals.

The U.S. dollar is confronting a significant crisis of confidence as it hovers near four-year lows. On Wednesday, the dollar weakened further after President Donald Trump dismissed its recent slump, sparking further dollar-offloading and buoying other major currencies such as the yen, euro, and sterling.

The euro surpassed the $1.2 mark for the first time since 2021, trading at $1.2015, and the sterling reached its highest levels since 2021, standing at $1.3823 during early Asian trading hours. The dollar index, which gauges the greenback against six major competitors, was recorded at 95.964, having fallen over 1% in the preceding session to a four-year low of 95.566.

Market analysts attribute this decline to Trump's inconsistent trade and foreign policies, combined with fears over the Federal Reserve's autonomy and elevated public spending. These factors perplex investors, despite the fundamentally strong U.S. economy, affecting decisions like potential currency interventions by U.S. and Japanese authorities.

(With inputs from agencies.)