The U.S. dollar has dropped to its lowest level since March 2022, fueling a surge in foreign exchange (FX) trading.
Why is the dollar falling?
- Political tensions: President Trump’s public criticism of Fed Chair Jerome Powell has rattled markets, with reports suggesting the White House explored removing him.
- Trade wars: New tariffs on Europe and Japan have weakened the dollar against the yen and euro.
- Investor flight: Rising bond yields and a weaker dollar signal global capital may be leaving U.S. markets.
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Market impact
- The euro jumped 1.3% against the dollar, while safe-haven currencies like the yen and Swiss franc strengthened.
- Gold hit record highs near $3,500/oz, and Bitcoin is rebounding after weeks of stagnation.
How low can it go?
Technical indicators suggest further declines, with the dollar index breaking key support levels. If the drop continues, the next major floor could be early 2022 lows.
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