The dollar remained near four-year lows after statements by Donald Trump, who downplayed the significance of the recent decline in the American currency. This stance reinforced the wave of dollar selling, providing a boost to the Japanese yen, euro, and pound sterling. Specifically, currency markets were absorbing the intense sell-off from the previous session, which drove the euro above the 1.20 dollar level for the first time since 2021. The single currency was trading at 1.1994 dollars, slightly lower on a daily basis. Sterling retreated to 1.3796 dollars, after strengthening 1.2% on Tuesday, also recording a high since 2021.
Trump: “The dollar’s value is excellent”
The dollar index (DXY), which reflects the dollar’s exchange rate against six major currencies, moved to 96.114 units, after falling more than 1% the previous day when it touched four-year lows. Donald Trump stated on Tuesday that “the dollar’s value is excellent”, a comment that traders interpreted as a sign of tolerance – or even encouragement – for further currency weakening.
“There is a clear crisis of confidence in the American dollar”, noted Kyle Rodda, analyst at Capital.com, adding that uncertainty around US trade and foreign policy may continue to maintain pressure on the currency.
Fed in the spotlight
The dollar has declined more than 9% in 2025 and is already losing approximately 2.3% within January, as investors worry about Fed independence, increasing public spending, and political interventions in monetary policy.
Attention turns to today’s Fed decision, with markets expecting interest rates to remain unchanged. However, the session is overshadowed by the potential replacement of Jerome Powell, attempts to remove Governor Lisa Cook, and the Trump administration’s investigations against the Fed.
