Dollar Index Drops 1.8% to 3-Year Low Amid Powell Removal Speculation

The US Dollar Index (DXY) has experienced a significant decline, dropping to a three-year low. This downturn is attributed to reports that President Donald Trump is considering the removal of Federal Reserve Chairman Jerome Powell. The latest data indicates that the DXY has fallen below 99, with a current value of 98.2, marking the lowest point since March 2022. Economist Peter Schiff highlighted the severity of the situation, noting that gold has surged over $50 to a record high of $3,380, the euro has risen above $1.15, and the dollar has weakened against the Japanese yen and Swiss franc.

The dollar's steep fall comes amid comments from National Economic Council Director Kevin Hassett. On Friday, April 18, Hassett revealed that Trump and his team are actively exploring the possibility of ousting Powell. This statement was in response to a question about whether removing Powell was an option. Hassett replied that the president and his team will continue to study the matter. He also criticized the Federal Reserve for politically motivated actions under Powell’s leadership, specifically citing the Fed's decision to raise interest rates shortly after Trump’s election and cut them ahead of the election, moves he claims favored the Democratic Party.

Trump has also expressed frustration with Powell's handling of interest rates. In a social media post, Trump compared Powell’s actions unfavorably to the European Central Bank, which is set to implement its seventh interest rate cut. Trump argued that Powell, whom he described as “always too late and wrong,” should have taken similar measures long ago to address economic conditions. Trump's dissatisfaction with Powell raises serious questions about the Federal Reserve’s independence and its implications for global markets. Powell, whose term as chair extends to May 2026, has previously stated that legal protections prevent his removal and that he intends to serve out his term.

Meanwhile, the development has positively affected Bitcoin’s (BTC) price, pushing it to its highest level since President Trump’s Liberation Day. The largest cryptocurrency surged to over $87,000 for the first time since April 2. At the time of writing, BTC was trading at $87,586, representing an appreciation of 3.5% over the past day. The inverse relation between the DXY and BTC further solidifies the case for a rally if the dollar depreciates. Generally, when the Fed lowers interest rates, the US dollar tends to weaken, driving investors towards cryptocurrencies, especially Bitcoin, which is often seen as a hedge against inflation and the weakening of fiat currencies.

If Powell is removed and President Trump successfully persuades the Federal Reserve to cut interest rates, it could likely lead to a crypto market rally. The latest decline in the dollar index has coincided with a notable increase in Bitcoin’s price. As markets celebrate these gains, the focus remains on Trump’s next moves and their broader economic consequences.