A weaker Dollar: Trump vs. Powell
The Dollar continued to lose ground yesterday as the truce between Israel and Iran appeared to continue to hold. There has been a noticeable return to focus upon macro and monetary influences in major currency pairs. Yesterday, Fed Chair Jay Powell provided his semi-annual monetary policy report before the Senate Committee. Powell warned that due to the surprises to the political economy so far this year, there is a risk that macroeconomic data grows increasingly unreliable. Put two and two together and you can see the risk to volatility created by the market’s return to focus upon data.
It was against this backdrop that the Chairman disclosed that he couldn’t rule out a July rate cut. Prospects of such rate cuts continued to keep the Dollar offered into the European afternoon session. Weakness in the greenback was compounded by Trump’s words delivered at the NATO convention in the Hague. Trump was keen to scald the leaking of intelligence documentation and any suggestion that the strikes he authorised on Iran’s nuclear facilities delivered anything short of total destruction.
Trump’s boasting of military successes against Iran are seen as a positive for risk conditions in the market. This manifests as a negative for the Dollar insofar as it unwinds any defensive bid in the Dollar that the potential for wider regional conflict induced. This effect pushes investors to sell Dollar and is not being offset by generating any significant boost to global growth forecasts outside of commodity pricing. GBPUSD and EURUSD both pushed towards their recent highs as the New York session progressed. This morning, those highs have advanced further with GBPUSD and EURUSD gaining a new big-figure.
Discussion and Analysis by Charles Porter
Related Insights
Daily Brief – Secondary effects
Charles Porter
Thu 29 Jan 2026
Secondary effects Despite the Federal Reserve decision last night offering momentary relief to the Dollar, a structural shift in USD remains underway. There were two themes to the Federal Reserve’s decision last night. Firstly, the Fed presented a decision to hold based upon the resilience that the US economy is showing. Secondly, Powell staged a […]
Daily Brief – A Dollar Vacuum
Charles Porter
Tue 27 Jan 2026
A Dollar Vacuum If you’ve ever heard the phrase, ‘a rising tide lifts all boats’, you already know everything you need about today’s FX market. That is provided of course you’re not trying to analyse the rising tide itself, in this case our US Dollar. The Dollar is the counter currency to most key pairs […]
Daily Brief – Left field
Charles Porter
Tue 20 Jan 2026
Left field After this weekend, markets have been left questioning whether the White House’s pursuit of Greenland remains noise or has become a material risk. Certainly, the threat of escalating tariffs once again until a deal is achieved in the United States’ favour escalates economic risk once again. Trump’s social media foreign policy over the […]
