US Dollar close to multi-year lows vs euro, Swiss franc

April 22, 2025: The US Dollar (USD) dropped against the yen and hovered around multi-year lows versus the euro and the Swiss franc on Tuesday as President Donald Trump’s attacks on the Federal Reserve raised concerns about the central bank’s independence.

Analysts said the dollar was left in an especially fragile state amid market concerns over the U.S. administration’s tariffs, which could trigger a global trade war.

Doubts about Fed independence threaten the dollar’s value as a reserve currency, with analysts noting possible divestments from what many consider over-exposure to U.S. assets.

The U.S. currency accelerated losses after Thailand’s prime minister said trade negotiations with Washington – scheduled to begin on Wednesday – would be postponed.

Trump ramped up his criticism of Fed chief Jerome Powell on Monday, calling him a “major loser” and demanding that he lower interest rates “NOW” or risk an economic slowdown.

On Friday, White House economic adviser Kevin Hassett said the president and his team were continuing to study whether they could fire Powell, who said last week the central bank can afford to be patient in judging how to set policy.

“The current worst-case scenario for the greenback is that Powell caves in and delivers an emergency rate cut, although that remains a low-probability event,” said Francesco Pesole, strategist at ING.

“Removing Powell from office or his resignation would have similar market effects.”
Money markets priced in a less than 10% chance of a Fed rate cut in May and 90 bps by year-end, roughly in line with the levels seen last week. IRPR

Barclays lifted its euro/dollar forecast to $1.15 based on the assessment of the removal of the Fed chair as a low-likelihood event, but argued that further revisions could therefore soon be needed should the situation escalate.

China on Monday accused Washington of abusing tariffs and warned countries against striking a broader economic deal with the United States at its expense.

The dollar was down 0.40% at 140.28 yen , after falling below the psychological 140 level for the first time since mid-September.

The greenback rose 0.30% to 0.8113 Swiss franc , not far from the decade-low 0.8042 reached in the previous session.

The euro fell 0.13% to $1.1498, after jumping to $1.1573 on Monday for the first time since November 2021.

“Underlying dynamics differ and the yen’s rise looks more fragile than the euro’s,” said Shusuke Yamada, forex strategist at BofA Japan, after flagging that both currencies gained about 12% against the U.S. dollar.

“The yen’s rise has accompanied a bigger rise in speculative positioning and increasing focus on a potential U.S.-Japan currency deal,” while “structural outflows from Japan have gone out of market radar,” he added.

While some analysts bet Washington will pressure Tokyo to help prop up the yen, Japan sees little scope for direct action.

The US dollar index , which measures the greenback against six other major currencies, was up 0.10% at 98.41, after sinking as low as 97.923 in the previous session, a level not seen since March 2022.

Markets closely watched developments on the war in Ukraine as the Kremlin said on Tuesday that there were no concrete plans for talks between Russia and Ukraine, but such contacts could take place if Ukraine was willing to remove certain obstacles.