U.S. Dollar Slump Intensifies Amid Political Pressure on Federal Reserve

The U.S. dollar fell sharply on August 20 as President Donald TRUMP escalated his criticism of the Federal Reserve, undermining confidence in the central bank's independence. The greenback dropped 0.5% following Trump's social media call for Federal Reserve Governor Lisa Cook to resign. Year-to-date, the dollar has declined 10% against a basket of foreign currencies—its worst performance in over five decades. Meanwhile, the euro has gained 13% against the dollar in 2023.

Analysts attribute the dollar's weakness to eroding trust in U.S. fiscal policy and fears of political interference at the Fed. Trump has repeatedly threatened to replace Fed Chair Jerome Powell with a loyalist and has pushed for aggressive rate cuts to stimulate markets. Geopolitical instability, abrupt tariff shifts, and signs of economic slowdown have further pressured the currency, driving investors toward gold as a SAFE haven.