Trump Batters Greenback With His Fed Criticism, Hard China Stance — Dollar Index Plunges To Fresh 3-Year Lows

The U.S. dollar Index (DXY) extended its declines, raising doubts regarding its appeal as a safe haven, as President Donald Trump’s policy measures continue to haunt the underlying currency.

Early Monday, the dollar index was trading down 1.21% at 98.18, marking the lowest since March 31, 2022. 

After breaking below $100 on April 10 for the first time in three years, the index has largely been confined below the psychological mark.

The negative sentiment toward the world’s largest traded currency stems from fears of a global recession, as the Trump administration’s reciprocal tariffs stifle growth and perk up inflation.

Trump has announced hefty 245% tariffs on imports from China, a country that supplies inputs and assembles devices for most U.S. tech giants. China hasn’t batted an eyelid but has chosen to take a confrontational path.

Most recently, China has warned its trading partners of retaliatory reciprocal tariffs if they enter into bilateral trade pacts with the U.S. in detriment to Chinese prospects.

Trump has also hurt the greenback by commenting on the Federal Reserve and its Chair, Jerome Powell. He has overtly signaled the need for a Fed funds rate cut in his press meetings and social media posts.

In the process, he has made no bones about ousting Powell, whose term expires only by May 2026.

Conversely, Powell has suggested that the central bank would wait and watch before moving the needle on rates. Lower interest rates are negative for a currency as it loses its relative appeal with overseas investors. 

A Reuters poll found that the median probability of recession setting in, in the next 12 months was approaching 50%. Corporate America is also bracing for a recession, with the Chief Executive’s April survey showing that the percentage forecasting a severe recession nearly quintupled to 14% from 3% in the previous month, while the proportion bracing for a mild recession dropped from 48% to 57%.

The Dollar Index is down over 8% for the year.

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