The dollar hits a three-year low and faces further falls if President Trump selects a replacement for Federal Reserve Chair Jerome Powell early, MUFG Bank’s Lee Hardman says in a note. The Wall Street Journal reported that Trump was toying with this idea amid frustration over Powell’s careful approach to interest-rate cuts. An early replacement could be used to undermine the Fed’s policymaking under Powell, providing a further potential trigger for a loss of investor confidence in the dollar, Hardman says. “A candidate who is perceived as being more open to lowering rates in line with Trump’s demands would reinforce the dollar’s current weakening trend.” The DXY dollar index falls to a low of 97.204.(renae.dyer@wsj.com)
Euro Could Rise Towards $1.20 if Dollar Weakens Further
0735 GMT – The euro faces tough resistance around $1.17 after briefly breaching this level overnight to hit its highest in more than three and a half years, ING analyst Francesco Pesole says in a note. A sustained break above $1.17 could pave the way for further gains towards $1.20, although this would require a further depreciation in the dollar. The euro’s rally comes as the dollar weakens after the WSJ reported that President Trump was considering announcing Federal Reserve Chair Jerome Powell’s replacement early. The euro potentially also received support from NATO agreeing on a 5% defense spending target and Trump sounding conciliatory towards U.S. allies, Pesole says. The euro is last up 0.3% at $1.1695, having reached $1.1717 overnight, LSEG data show.
