The Dollar fell to a new seven-month low against the Japanese Yen on Tuesday, as President Donald Trump's continuous criticism of the Federal Reserve chairman weakened investor confidence in the US economy.
The US currency's decline deepened after Thailand's prime minister announced that trade talks with Washington, set to start on Wednesday, would be delayed.
The greenback weakened near the decade-low it hit the day before against the Swiss Franc and inched closer to a 3-and-a-half-year low against the Euro.
On Monday, Trump intensified his attacks on Fed Chairman Jerome Powell in a Truth Social post, labelling him a “major loser” and urging him to cut interest rates “NOW” to avoid an economic slowdown.
White House economic advisor Kevin Hassett mentioned on Friday that the president and his team were still exploring whether they could remove Powell, just one day after Trump stated that Powell's removal “cannot come fast enough,” Reuters reports.
This latest criticism follows Powell's remarks from the previous week, where he indicated that the central bank could afford to be patient in determining policy and suggested that interest rates should not be lowered until it’s clearer that US tariffs won’t lead to persistently higher inflation.
“There's this terrible stalemate there, and concern that there will be some sort of action taken to replace Powell, which would create a real panic in the Dollar,” according to Eric Kuby, chief investment officer at North Star Investment Management.
Whereas in regard to trade, “every day that there are no deals struck to provide any relief, it creates continued anxiety” that Trump’s policies will continue as they are at present, which would be “destructive for the economy,” Kuby added.
On Monday, China accused Washington of misusing tariffs and cautioned other countries against making broader economic agreements with the US that could be at China's expense, escalating the trade war between the world's two largest economies.
As a result, the Dollar dropped by as much as 0.6%, reaching the significant 140 Yen mark for the first time since mid-September.
Furthermore, the greenback slipped 0.1% to 0.8082 Swiss Franc, remaining close to the decade-low of 0.8042 hit in the previous session.
In addition, the Euro remained mostly unchanged at $1.1535, after rising to $1.1573 on Monday, its highest level since November 2021. Meanwhile, Sterling climbed 0.25% to $1.3412, following a surge to $1.3421 earlier in the week, its highest since September.
Whereas the Dollar index, which tracks the currency against six major peers, dropped to 98.117 after falling as low as 97.923 in the previous session, a level not reached since March 2022.