Dollar Dips Amid Fed Chair Controversy

The U.S. dollar fell on Wednesday following reports that President Trump considered firing Federal Reserve Chair Jerome Powell. Trump later denied any such plans but expressed dissatisfaction with Powell's slow rate cuts. The potential removal of Powell could impact the dollar's credibility.

The U.S. dollar faced a significant drop on Wednesday, spurred by reports suggesting that President Donald Trump considered dismissing Federal Reserve Chair Jerome Powell. The dollar, however, recovered slightly after Trump denied the allegations, despite expressing displeasure with Powell's cautious approach to interest rate cuts.

Internal sources shared that Trump entertained the idea of removing Powell before the conclusion of his term in May, even consulting Republican lawmakers who apparently viewed the notion favorably. The dismissal of Powell is believed to pose a risk to the dollar's standing as a reliable currency, potentially undermining its perceived safety.

Trump's ongoing criticism of Powell for his hesitation to lower rates aligns with the administration's broader concerns, including cost overruns linked to a $2.5 billion renovation at the Federal Reserve's Washington headquarters. As a result, the dollar index saw a decline of 0.27%, while the currency weakened notably against the euro and the Japanese yen.

(With inputs from agencies.)