Former U.S. President Donald Trump recently reignited tensions by publicly criticizing Federal Reserve Chair Jerome Powell, rattling the financial markets. His remarks stirred doubts about the Fed’s independence, accelerated the decline of the U.S. dollar, and pushed the Dollar Index (DXY) down to its lowest point in over three years on June 26. Meanwhile, tech stocks staged a strong rebound, risk assets gained across the board, and gold prices inched closer to all-time highs.

At the heart of current market concerns is whether the Federal Reserve can maintain independent monetary policy amid growing political pressures. Many investors interpreted Trump’s criticism as a call for the Fed to start cutting interest rates soon—a move that would support his economic narrative heading into election season. As a result, the dollar index tumbled to 97.47, down more than 10% since the start of the year and the weakest since February 2022. The selloff reflected broader anxieties about slowing U.S. growth, policy uncertainty, and a turbulent shift in global financial dynamics.

The weakening dollar lifted major currencies across the board. The British pound broke above 1.3700 against the dollar, hitting a multi-year high, while the euro soared against the yen, reaching an 11-month peak. In Asia-Pacific markets, the Australian dollar held steady near 94.50 against the yen, supported by a return in risk sentiment and renewed optimism over China’s economic recovery. Gold, reaffirming its role as a safe haven, surged toward $3,360 per ounce, highlighting growing demand for protection against a weakening dollar.

Looking ahead, a series of key U.S. economic indicators—including final Q1 GDP, durable goods orders, Chicago PMI, existing home sales, and weekly jobless claims—will be released in the coming days. Stronger-than-expected data may give the dollar a short-term lift, but the overall bearish momentum remains intact. JPMorgan sees further downside, projecting that the DXY could decline another 6% over the next year as U.S. growth continues to slow.

Market expectations of a rate cut in the Fed’s July meeting are also rising, with the current probability at around 25%. Analysts generally agree that if political uncertainty remains elevated and the Fed leans dovish, the dollar will likely stay under pressure in the near term.

U.S. equities, on the other hand, are benefiting from the twin tailwinds of a weaker dollar and easing rate expectations. Tech stocks, in particular, are leading the charge, helping lift both the S&P 500 and Nasdaq. Investors are noticeably gravitating toward companies with strong innovation and growth potential. As long as the Fed avoids aggressive rate hikes, high valuations in the tech sector appear sustainable.

In the short term, political interference in Fed policy decisions could remain a persistent risk, especially as election season heats up. With a weaker dollar becoming the market consensus, global capital flows may become more volatile. Investors should keep a close eye on upcoming U.S. economic data and policy signals, adjusting their portfolios accordingly to navigate heightened market swings with a level head.