Dollar continues to decline amid risks to Federal Reserve independence

The dollar continues to weaken as investors grow increasingly concerned about potential threats to the Federal Reserve's independence. President Donald Trump has once again criticized the central bank’s chair Jerome Powell, stating that he is considering several candidates to replace him. Expectations of monetary policy easing by the Fed, along with uncertainty surrounding trade negotiations with other countries, are adding further pressure to the greenback, according to Reuters.

The dollar slipped back toward multi-year lows against a basket of major currencies on Thursday, despite a brief recovery fueled by easing geopolitical tensions in the Middle East. Kaspar Hense of RBC BlueBay Asset Management expects a further decline in the US currency, noting markets have yet to fully price in risks from a potential Fed leadership overhaul.

Recent comments from central bank official Michelle Bowman about potential interest rate cuts have weighed further on the greenback. Market pricing now reflects a 25% chance of the Fed easing monetary policy by July, up from 12.5% just a week earlier, Reuters reports.