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Date: 26-jun-2025 | By: Nuztrend Team
The U.S. dollar has plunged more than 10% in the first half of 2025—its worst performance for the first six months of any year since 1973. The steep drop comes in the wake of President Donald Trump’s repeated public criticism of Federal Reserve Chair Jerome Powell, coupled with speculation that the administration may seek to replace him ahead of his term’s end.
Earlier this week, President Trump took to social media and public forums to lambast Powell’s “incompetence,” calling him “weak on inflation” and “afraid to act in America’s interest.” Trump hinted that the White House was reviewing options for a replacement—despite Powell’s current term extending through 2026.
The remarks rattled global financial markets, already jittery over policy uncertainty and fragile macroeconomic recovery signs in the U.S.
The fallout was immediate. The dollar index (DXY) dropped below 92.00, while the euro, Swiss franc, and British pound all posted strong gains. Traders and hedge funds moved aggressively into safer currencies, with some betting on a prolonged weakening cycle.
Analysts suggest markets are now pricing in at least two interest rate cuts by the Fed in the second half of 2025—far more dovish than forecasts earlier this year.
Speaking briefly at a monetary policy summit in Atlanta, Powell remained composed, reiterating the Fed’s independence and its dual mandate to balance inflation and employment.
However, with Trump’s influence growing post-election and Republican lawmakers voicing support for “new leadership,” Powell’s position is widely seen as vulnerable.
The dollar’s sharp fall is already affecting trade balances and capital flows:
According to economists at Morgan Stanley, if the uncertainty persists, it could cause “structural damage” to investor confidence in U.S. monetary policy.
While the dollar’s decline offers temporary boosts to exporters and global borrowers, it reflects a deeper unease over U.S. economic stewardship. With Fed independence under pressure, rate path speculation intensifying, and markets on edge, the second half of 2025 may prove even more volatile than the first.
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