Dollar Dives to Fresh Low as Trump Threatens Fed Independence

Market Summary

The U.S. dollar plunged to its lowest level since March 2022, after President Trump signaled intentions to challenge the independence of the Federal Reserve, igniting a fresh wave of uncertainty in global financial markets. The president, alongside key allies, is reportedly exploring legal avenues to remove Fed Chair Jerome Powell, citing dissatisfaction with current monetary policy amid rising inflationary risks and slowing growth.

The move was met with sharp backlash from investors, who viewed it as a potential threat to the institutional integrity of the U.S. central bank. As a result, the Dollar Index (DXY) collapsed below the critical $99.00 mark, triggering risk aversion across asset classes.

Safe-haven demand surged, with the Japanese Yen and Swiss Franc outperforming their G7 peers, as investors fled from the greenback and repositioned into traditional shelters. The dollar’s decline was further exacerbated by lingering concerns over Trump’s sweeping global tariffs, which have strained trade ties and added to global economic unease.

Equities weren’t spared. Wall Street is bracing for deeper losses, with major indices under pressure as traders digest the implications of potential political interference in monetary policy.

Looking ahead, attention now turns to Japan’s CPI release tomorrow, which could offer key insights into the strength of the Yen and further shape safe-haven flows in the near term. Market sentiment remains fragile, and any additional shocks from Washington could trigger more dollar liquidation and flight to safety.

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Current rate hike bets on 7th May Fed interest rate decision: 

Source: CME Fedwatch Tool0 bps (86%) VS -25 bps (14%)

Market Overview

Economic Calendar

(MT4 System Time)

N/A

Source: MQL5 

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Market Movements

DOLLAR_INDX, H4

The U.S. Dollar Index, which tracks the greenback against a basket of six major currencies, came under renewed selling pressure as markets reopened on Monday. Confidence in the U.S. economic outlook remains fragile despite ongoing trade discussions between the U.S. and major global economies. While the broader U.S.-China trade relationship continues to be a crucial catalyst, fears surrounding de-dollarization are mounting. The dollar’s direction will largely hinge on the progression of these trade talks and overall global risk sentiment.

The Dollar Index is trading lower following the prior breakout below the previous support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 24, suggesting the index might enter oversold territory. 

Resistance level: 99.25, 101.95

Support level: 97.15, 95.15

XAU/USD, H4

Gold prices remained resilient, holding near record highs amid persistent geopolitical tensions and a retreat in risk appetite. The ongoing U.S.-led trade disputes have strengthened demand for safe-haven assets, with gold benefiting from market uncertainty. Investors are closely monitoring upcoming economic data and the IMF’s latest projections, due this week. IMF Managing Director Kristalina Georgieva has indicated significant downward revisions to global growth forecasts—though recession is not currently expected. This backdrop continues to support gold’s bullish momentum.

Gold prices are trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum. However, RSI is at 74, suggesting the commodity might enter overbought territory. 

Resistance level:  3380.00, 3495.00

Support level: 3350.00, 3290.00

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AUD/USD，H4

The AUD/USD pair surged to its highest level in 2025, breaking out of a prolonged sideways consolidation and signaling a clear bullish bias. The breakout was driven by a combination of China’s central bank policy stance and mounting pressure on the U.S. dollar amid political turbulence. The People’s Bank of China (PBoC) maintained its key borrowing rates in a move perceived as hawkish, reinforcing confidence in the region’s economic resilience. As a major proxy for Chinese economic momentum, the Australian dollar benefited directly from the move, especially amid growing market optimism over China’s growth outlook. Meanwhile, the U.S. dollar remained under pressure after President Trump’s remarks suggesting the potential removal of Fed Chair Jerome Powell, raising alarms over the Federal Reserve’s independence. This fueled a fresh wave of dollar weakness, further propelling the Aussie higher.

AUD/USD has moved upward from its sideway range, suggesting a bullish bias for the pair. The RSI remains at elevated levels while the MACD is edging lower, which is a contradicting signal for the pair. 

Resistance level:  0.6450, 0.6540

Support level: 0.6360, 0.6270

EUR/USD, H4

The EUR/USD pair surged to fresh highs in the last session, buoyed primarily by broad-based U.S. dollar weakness, despite lingering concerns over the European Central Bank’s recent dovish tilt. The euro found strong support as traders fled the dollar following President Trump’s controversial remarks suggesting he may move to remove Federal Reserve Chair Jerome Powell, a move seen as threatening the central bank’s independence. Although the ECB’s monetary easing stance last week weighed on the single currency initially, the shift in market focus toward U.S. political and policy instability provided a strong bullish catalyst for the pair.

The pair has broken above the price consolidation range to its recent high level, suggesting a bullish bias for the pair. The RSI has broken into the overbought zone, while the MACD shows signs of rebounding from above the zero line, suggesting that fresh bullish momentum is gaining. 

Resistance level: 1.1622, 1.1750

Support level: 1.1470, 1.1340 

Dow Jones, H4: 

Following a quiet session on Monday due to the Easter holiday and Good Friday closures, market participants are preparing for heightened volatility as a wave of key corporate earnings is set to drive sentiment. Tesla will report on Tuesday amid ongoing global supply chain disruptions and renewed scrutiny tied to Elon Musk’s political associations. Alphabet’s (NASDAQ: GOOGL) Thursday earnings will offer insights into digital advertising trends and AI initiatives, while Boeing’s results on Wednesday may reveal the impact of trade-related pressures. These releases will be critical in assessing the health of corporate America in an uncertain macro environment.

The Dow is trading lower following the prior retracement from the resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 40, suggesting the dow might extend its losses since the RSI stays below the midline. 

Resistance level: 40595.00, 41830.00

Support level: 37925.00, 36305.00

USD/JPY, H4: 

The USD/JPY pair continued to decline as dollar weakness and renewed demand for the Japanese yen weighed on the pair. Investors have been rotating into the yen amid heightened global uncertainties following the long weekend. The Bank of Japan, which has adopted a more hawkish stance compared to its peers, has also contributed to yen strength, reinforcing the downward trend in USD/JPY.

USD/JPY is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum. However, RSI is at 28, suggesting the pair might enter oversold territory. 

Resistance level: 143.95, 147.15

Support level: 140.45, 137.45

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Crude Oil, H4

Oil prices slipped as concerns about global energy demand resurfaced, driven by the economic fallout of trade disputes. Additionally, diplomatic talks between the U.S. and Iran are being watched closely for their potential to impact crude supply. Following a weekend meeting, Iran’s foreign minister noted a “better understanding” with the U.S. regarding the nuclear deal. Further talks in Oman on Wednesday may lead to sanctions relief, which could increase Iranian oil exports and pressure global oil prices.

Oil prices are trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 50, suggesting the commodity might extend its losses since the RSI retreated sharply from overbought territory. 

Resistance level: 64.45, 66.60

Support level: 62.00, 59.65