The U.S. dollar weakened against major global currencies on Tuesday after President Donald Trump’s decision to fire Federal Reserve Governor Lisa Cook raised fresh concerns over the central bank’s independence.
The euro climbed 0.37% to $1.1664, while the British pound gained 0.24% to $1.3486. Against the Japanese yen, the dollar slipped 0.13% to 147.57, and it fell 0.24% versus the Swiss franc to $0.8040. The dollar index, which tracks the greenback against a basket of six major currencies, declined 0.33% to 98.15.
Trump claimed he was removing Cook over alleged improprieties in mortgage borrowing. Cook rejected the move, saying the president lacks authority to dismiss her and confirming she will not step down. Markets were caught between concerns over political interference at the Fed and potential benefits from looser policy.
Karl Schamotta, chief market strategist at Corpay, noted that “the noise surrounding Trump’s attempt to dismiss Governor Cook has left markets largely unmoved.” Investor sentiment also held steady after stronger-than-expected U.S. durable goods orders and consumer confidence data.
Trump has often criticized Fed Chair Jerome Powell for not cutting rates but has stopped short of threatening his removal. Traders currently see an 86% chance of a rate cut in September, with Morgan Stanley joining other banks in forecasting a reduction after Powell signaled a dovish stance last week.
According to Uto Shinohara of Mesirow Currency Management, the administration’s unpredictable actions are eroding confidence in the U.S., while a more dovish Fed outlook is keeping the dollar in check. However, Kenneth Broux of Societe Generale cautioned that weak fundamentals in Europe limit how much investors can bet against the greenback.
Meanwhile, political risks in France weighed on European bond markets. Yields on 10-year French government bonds rose to 3.53%, the highest since March, amid expectations the minority government could be ousted next month. The uncertainty added to global concerns about central bank independence, sparking further selling in government bonds across the U.S., U.K., and Japan.
Analysts at ING questioned whether French instability would impact broader sentiment toward the euro or remain an isolated issue.
In the crypto market, bitcoin gained 0.57% to $110,286.43 after three consecutive losing sessions, while ether surged 3.34% to $4,504.07.
