Dollar's Decline: Consequences Loom After Fed Chair's Legal Threat

The U.S. dollar tumbled against major currencies as the Trump administration threatened Federal Reserve Chair Jerome Powell with legal action. The dollar index fell, while gold surged. Uncertain leadership at the central bank and geopolitical tensions in Iran added volatility, impacting currency markets globally.

The U.S. dollar took a notable hit on Monday, falling sharply against the euro and Swiss franc after the Trump administration issued a legal threat to Federal Reserve Chair Jerome Powell. This development raised concerns about the greenback's status as a safe-haven currency.

The dollar index, which tracks the performance of the U.S. dollar against six major currencies, recorded a 0.37% decline, ending a five-day winning streak. Concurrently, gold prices soared to a record $4,600.33 per ounce, following a video release by Powell that defended the Fed's independence.

In response to shifting political and economic dynamics, some analysts noted that market panic was subdued, with expectations that President Trump would appoint a credible successor to Powell. Meanwhile, geopolitical tensions, particularly in Iran, have intensified, presenting further challenges for the currency markets.

(With inputs from agencies.)