Trump Hits a Nerve in America! Dollar Index Plummets to Three-Year Low!

TradingKey - President Trump threatens to fire Fed Chair Powell. The dollar crashes, hitting a three-year low. It may continue to face downward pressure.

On Monday, during the Asian trading session, the U.S. dollar index fell more than 1% following former President Donald Trump's threat to dismiss Federal Reserve Chair Jerome Powell. The index dropped to a low of 98.16—its weakest  level in three years. The next major support level is seen at 90.

Dollar Index Trend Chart, Source: TradingView

Last week, Trump suggested he could remove Powell, telling reporters, "If I let him go, he'll be gone quickly, believe me." The remarks have placed additional pressure on the dollar, fuelling market uncertainty.

French economist Eric Lombard warned that dismissing  Powell could undermine the dollar's credibility and risk pushing the U.S. economy into a period of stagnation. Analysts at Goldman Sachs echoed this concern, stating that a loss of Fed  independence could trigger drastic market shifts .

However, during a celebration in Louisiana, Senate Banking Committee member John Kennedy argued that the president lacks the authority to fire the Fed chair. Speaking on NBC, Kennedy said, "I don’t think the president, any president, has the right to dismiss the Fed chair."