US Dollar Hits Three-Year Low as Stocks Tumble Amid Trump Attacks on Fed
Wall Street tumbled and the dollar slumped to a three-year low on Monday as growing global skepticism over U.S. investments intensified, driven by President Donald Trump‘s ongoing trade war and public criticism of the Federal Reserve.
These actions have rattled confidence in the traditional economic order, prompting investors to pull back.
Why It Matters
Trump has repeatedly blasted Federal Reserve Chair Jerome Powell, whom he appointed in 2018, for not cutting interest rates.
On Thursday, Trump suggested he could remove Powell from the position—a move that would spark a major legal battle over the political independence of the central bank.
Trump says that interest rates should be cut because he believes, “we have essentially no inflation.” But Powell has warned that Trump’s sweeping tariffs, which sent the global markets into a tailspin, could fuel inflation, making it less likely the Fed can lower rates.
Federal Reserve Chairman Jerome Powell speaks during a news conference following a two-day Federal Open Market Committee meeting in Washington on July 31, 2019.
AP/AP Photo/Manuel Balce Ceneta, File
What To Know
The S&P 500 plunged 2.4 percent Monday, bringing it 16 percent below its record high from just two months ago and delivering a significant blow to retirement accounts tied to the index.
The Dow Jones Industrial Average tumbled 971 points, or 2.5 percent, while steep losses in major tech stocks like Tesla and Nvidia dragged the Nasdaq down 2.6 precent. In a concerning shift, the U.S. dollar hit a three-year low—an unusual development during market turmoil, as they are typically seen as safe havens.
The U.S. Dollar Index (DXY) slumped to 97.92 on Monday, its lowest level since March 2022.
The benchmark dollar index has dropped about 5 percent since early April, when Trump announced his sweeping global tariffs that shook Wall Street and markets around the world.
He has since announced a 90-day pause on the tariffs for all countries except China, but the rapidly escalating trade war between the United States and the world’s biggest manufacturer nation has left many investors on edge.
U.S. government bonds, typically seen as a slow and safe investment, also sank Monday as global investors seek to keep their money outside of the United States amid fears of a looming recession and volatile American markets.
Tariff talks with Japan last week further shook confidence when they failed to reach a quick deal that could lower tariffs and protect the economy. They had been seen as a “test case,” according to Thierry Wizman, a strategist at Macquarie.
Gold, seen as a safe-haven investment, bucked the downward markets trends to continue to rise.
What People Are Saying
President Donald Trump told reporters in the Oval Office during a meeting with Italian Prime Minister Giorgia Meloni last week: “If I want [Powell] out, he’ll be out of there real fast, believe me. I’m not happy with him.”
Strategists at BlackRock Investment Institute, in a report: “We can no longer extrapolate from past trends or rely on long-term assumptions to anchor portfolios. The distinction between tactical and strategic asset allocation is blurred. Instead, we need to constantly reassess the long-term trajectory and be dynamic with asset allocation as we learn more about the future state of the global system.”
Chris Zaccarelli, chief investment officer for Northlight Asset Management, told Newsweek: “Investors are in a foul mood, selling stocks and bonds and buying gold and we believe this is a result of weakening confidence among global investors—as well as some U.S.-based investors—as news breaks of assaults on the Fed’s independence and increasing concerns about shaking up the existing world order. To the extent that there is less demand for US goods from abroad—either because of tariffs and/or a weakening global economy—there is less demand for U.S. dollars. Likewise, if there is less interest in U.S. stocks and bonds then there is a lower demand for U.S. dollars.”
Jeff Buchbinder, chief equity strategist for LPL Financial in Boston, told Newsweek: “A multi-front trade war is by itself a lot for stocks to handle, so adding a Fed independence crisis on top of it has markets understandably jittery.”
What Happens Next
Powell’s term as Fed chair runs through May 2026. However, on Friday, White House economic adviser Kevin Hassett told reporters that the president was looking into whether they could oust Powell before then.
Reporting by the Associated Press contributed to this story.
Update 4/21/25, 5:57 p.m. ET: This story was updated with additional information.