The dollar falls to its lowest level in 4 years after Trump's comments
Global currency markets experienced sharp fluctuations during trading on Wednesday, with the US dollar falling to near its lowest level in four years ahead of the Federal Reserve's monetary policy decision and as the impact of US President Donald Trump's comments on the markets intensified.
The US dollar continues to decline under pressure from political statements
The US dollar fell sharply after Trump's statements downplaying the importance of the currency's weakness, asserting that the dollar is "fine." Traders interpreted these remarks as a green light to continue selling the dollar, leading to an acceleration of exits from the US currency and a rise in major competing currencies.
Growing concerns about the independence of the Federal Reserve, coupled with the Trump administration's volatile trade policy, contributed to deepening the dollar's losses, which lost more than 9% of its value during 2025 and has continued to decline since the beginning of this year by more than 2% of its value so far.
Dollar Index (DXY) near 4-year low
The Dollar Index (DXY), which measures the performance of the US currency against a basket of six major currencies, is trading near its lowest level in four years, despite recording a slight rebound during today's session in an attempt to catch its breath after a strong sell-off.
Euro exceeds $1.20 for the first time since 2021
The euro benefited from the dollar's weakness, with the EURUSD pair breaking above $1.20, its highest level since 2021, supported by outflows from the dollar and market expectations of a more accommodative US monetary policy in the medium term.
Sterling hits new high The pound
sterling continued its gains, with the GBPUSD pair rising to its highest level since 2021, after touching 1.3870 during yesterday's trading, supported by the weakness of the US currency and improved risk appetite.
Dollar against Swiss franc at 15-year low
The USDCHF pair fell sharply to its lowest level in nearly 15 years, as investors turned to safe-haven currencies amid declining confidence in US assets.
Australian dollar benefits from inflation data
The Australian dollar/US dollar (AUDUSD) pair rose to near its highest level in three years, supported by Australian core inflation data that came in higher than expected.
Markets have raised the odds of an Australian interest rate hike at the next meeting to over 70%, while Australia's four major banks are expecting a monetary tightening move.
Japanese yen continues to benefit from dollar weakness
The Japanese yen made strong gains, rising more than 1% during the last few sessions to reach 152.10 yen per dollar (USDJPY), its highest level in three months, before retreating slightly today.
This recent rise has reignited talk of possible intervention in the foreign exchange market, especially with statements by the Japanese finance minister confirming the government's readiness to take appropriate action when necessary. Investors remain unconvinced of the impact of any actual intervention, especially as Prime Minister Sanae Takaichi is focusing her early election campaign on expanding economic stimulus measures, with Japanese elections scheduled for February 8.
All eyes are on today's US Federal Reserve decision
Markets are awaiting the US Federal Reserve's monetary policy decision today, amid widespread expectations that interest rates will remain unchanged. However, the main focus will be on Jerome Powell's statements, particularly regarding the future of monetary policy and the independence of the central bank.
Caution is mounting in the markets amid talk of a possible replacement for the Fed chair, ongoing investigations, and increasing political pressure from the White House.
Other events affecting the markets
In addition to the Fed's decision, investors are awaiting the announcement of Meta and Tesla's results after the close of US markets, which could add further volatility to US indices, particularly the Nasdaq.
