US Dollar Plummets to Three-Year Low Amid Fed Independence Fears

The US Dollar Index (DXY) is reeling near 98.50, marking a three-year low after a sharp decline on Monday, April 21, 2025. Escalating concerns over the Federal Reserve’s independence, fueled by President Trump’s public criticism of Fed Chair Jerome Powell, have severely dented investor confidence in the greenback. Coupled with a bearish technical outlook and a surge in safe-haven assets like gold, the US Dollar faces mounting pressure as markets grapple with political uncertainty and a risk-averse sentiment.

Political Turmoil Undermines the Dollar

The DXY’s steep drop reflects growing unease over the Federal Reserve’s autonomy following President Trump’s latest attacks on Jerome Powell. Accusing the Fed Chair of manipulating interest rates for political gain in 2024 and labeling him as slow to address economic challenges, Trump has reportedly explored legal avenues to remove Powell. These developments have raised alarms about potential political interference in monetary policy, eroding trust in the Fed’s ability to manage inflation and economic stability. The White House’s hostile rhetoric, amplified through social media, has deepened fears of a politicized central bank, further weakening the US Dollar’s appeal. As a result, the DXY has slid toward the 98.00 zone, with market sentiment increasingly cautious amid unpredictable trade and fiscal policies.

Safe-Haven Gold Soars as Risk Aversion Grips Markets

The broader market environment has turned sharply risk-averse, driving a rush to safe-haven assets. Gold has surged to an all-time high near $3,425 per ounce, capitalizing on the collapsing US Dollar and heightened global uncertainty. The precious metal’s explosive rally above $3,400 underscores investors’ flight to safety as concerns mount over the US monetary system’s credibility. With the DXY hitting its lowest level in three years, traders are reassessing the US Dollar’s long-term status as the world’s reserve currency, particularly in light of ongoing political and economic volatility.

Bearish Technicals Signal Further Downside

From a technical perspective, the DXY’s outlook is decisively bearish. Trading near 98.50 within a daily range of 97.92–99.21, the index is under intense selling pressure. The Relative Strength Index (RSI) has plunged to 24.22, signaling deeply oversold conditions, while the Moving Average Convergence Divergence (MACD) continues to flash a strong sell signal. Key moving averages reinforce the negative bias, with the 20-day Simple Moving Average (SMA) at 102.26, the 100-day SMA at 106.04, and the 200-day SMA at 104.63 all trending downward. The 10-day Exponential Moving Average (EMA) at 100.38 and SMA at 100.69 form immediate resistance, with additional barriers at 98.65, 100.38, and 100.69. While short-term oscillators like the Ultimate Oscillator (37.76) and Awesome Oscillator (−3.54) show neutral readings, the overall structure points to sustained downward momentum.

Outlook: A Precarious Path for the US Dollar

The US Dollar Index’s slide to 98.50 reflects a perfect storm of political uncertainty, eroded confidence in the Federal Reserve, and a bearish technical setup. President Trump’s attacks on Fed leadership and the specter of a compromised central bank have triggered a flight to safe-haven assets, with gold soaring to record highs.

Unless political clarity emerges or risk sentiment stabilizes, the DXY is likely to face further downside. Investors should monitor resistance levels at 98.65 and 100.38, as well as the critical 98.00 support zone, for signs of a potential reversal or deeper decline. For now, the US Dollar remains under siege, with its trajectory tied to the unfolding drama surrounding the Fed’s independence.