The dollar has dropped Thursday at its lowest level since 2021 against the euro and the pound sterling, penalized by anticipations of more marked than expected rate of the federal reserve. The greenback is traded 1.17 USD for 1 EUR.
The comments deemed conciliatory by Jerome Powell before the Congress reinforced this perspective: the president of the Fed recognized that without the fears of inflation linked to the new customs tariffs of the Trump administration, the institution would undoubtedly have continued its softening cycle. Despite a generally cautious tone (Powell prefers to wait for a rise in inflation this summer), the markets have retained the idea of ​​a faster turn towards an accommodating policy.
This nervousness has accentuated with the virulent criticisms of Donald Trump, who called Powell as “catastrophic” and openly mentioned his replacement before the end of his mandate in May 2026. The Wall Street Journal claims that an announcement could intervene in the fall, making fear of the emergence of a “shadow president” likely to undermine the authority of the Fed. “This weakens its credibility and creates an uncertainty on the trajectory of the rates,” said Nick Rees, from Monex Europe. Two influential members of the Central Bank, Christopher Waller and Michelle Bowman, also pleaded for a rapid softening, pointing to the weakness of inflation and a loss of gear market.
The euro and the pound sterling progress against the greenback
The markets are now incorporating 65 points in -rate basis points by the end of the year, compared to 46 the previous week. The euro climbed 0.39% to $ 1.1705, a summit since September 2021, while the book increased by 0.45% to 1.3728. The Swiss franc has reached an unprecedented record in ten and a half years, and the Yen has been increased by 0.6%. In the background, investors move away from the greenback, deemed vulnerable in the face of monetary and commercial uncertainty.
