The U.S. dollar future is right now under severe pressure as President Trump continues to escalate his attacks on Federal Reserve Chair Jerome Powell. Market volatility has surged in recent days following Trump’s harsh criticism of Powell for not lowering interest rates, and the dollar has actually plunged nearly 10% since January.

The U.S. economy under pressure from these developments and the uncertainty around Trump’s dollar policy are raising serious alarms about Fed independence and market stability.

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How Trump’s Attacks on the Fed and Market Volatility Could Shape the US Dollar’s Future

Powell Under Fire

Fed chair Powell faces an incredibly tough situation right now as Trump’s rhetoric continues to intensify. The President recently called Powell “a major loser” for maintaining current rates, and this has really fueled speculation about Powell’s possible removal, even though Trump technically lacks the actual authority to fire him.

Former Boston Fed President Eric Rosengren stated:

“Unless the goal is to make the US trade like a third-world country, threatening the Federal Reserve’s independence only makes the US less attractive to foreign investors.”

At the moment, the online prediction market Polymarket shows about a 19% chance of Powell being fired by the end of this year, which is up from around 15% earlier in 2025.

Dollar in Steep Decline

The U.S. dollar future looks increasingly uncertain and somewhat troubling as the ICE U.S Dollar Index has already dropped nearly 10% this year, with approximately 6% of that decline happening in April alone – which ranks among the eight biggest monthly drops in over 50 years.

Policymakers worry about the historic scale of dollar selling now underway, as it appears to stem from concerns about the direction and credibility of U.S. policymaking.

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Fed Independence Questioned

Experts have traditionally viewed central bank independence as absolutely essential to the U.S. dollar future and its stability. The current political interference certainly threatens this foundation in ways we haven’t really seen before.

Jack Ablin, chief investment officer of Cresset Capital Management, warned that replacing Powell with a Trump loyalist would trigger a “crisis of confidence” in financial markets.

Just this past Monday, all three major equity indices dropped by approximately 2.5% after Trump’s latest attack, which clearly demonstrates the immediate consequences for the U.S. economy under pressure from this ongoing political tension.

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At the time of writing, traders are closely watching for April manufacturing data to gauge how Trump’s tariffs might further compound the U.S. dollar future crisis and any signs that Powell might step down to limit market damage.