The Dollar Drops Near Its Lowest Level in 3.5 Years

SadaNews - The US dollar stabilized near its lowest levels since February 2022 against a basket of major currencies during Wednesday's trading, influenced by cautious signals from Federal Reserve Chairman Jerome Powell, alongside concerns over the potential repercussions of the massive spending bill announced by President Donald Trump.

The dollar fell to its lowest levels against the euro since September 2021, and recorded its weakest levels against the Swiss franc since January 2015.

Powell confirmed, during his participation in the annual conference of the European Central Bank in Sintra, Portugal, that the Fed is following a "patient" approach regarding interest rate cuts, but did not rule out the possibility of a cut during this month's meeting, emphasizing that the decision will depend entirely on forthcoming economic data.

The dollar's decline comes at a time when markets are monitoring the impact of Trump's tax and spending bill, which was passed by the Senate this week, and is expected to add trillions of dollars to the national debt, raising investors' concerns about the stability of the United States' financial situation.

The importance of the upcoming US non-farm payroll report, set to be released on Thursday, is increasing, as recent "JOLTS" data indicates the continued strength of the labor market, which has helped the dollar recover slightly from its lowest levels recorded on Tuesday.

The Tax Bill

The dollar index, which measures the performance of the US currency against a basket of six major currencies, rose slightly to 96.677, but remained close to its lowest level overnight of 96.373.

At the same time, investors continue to monitor the massive tax and spending bill proposed by President Donald Trump, which could add about $3.3 trillion to the US national debt. After its passage in the Senate, the bill is expected to return to the House of Representatives for final approval.

Rodrigo Catri, a strategist at the National Australia Bank, told Reuters: "Confirmation that this law will lead to an increase in government issuances and public spending beyond available capabilities is not good news for the US bond market and can be seen as one of the main reasons behind the dollar's weak performance."

The pressure on the US dollar continued to escalate against the backdrop of President Donald Trump's ongoing attacks on Federal Reserve Chairman Jerome Powell, bringing the issue of the independence of the US central bank back to the forefront of discussions.

In an unusual move, Trump sent a letter to Powell on Monday, accompanied by a handwritten list of major central bank interest rates around the world, suggesting that the US interest rate should range between 0.5% (as in Japan) and 1.75% (as in Denmark), and he wrote a sarcastic comment: "As usual... you were too late."

Mixed Performance of the Dollar Against Global Currencies

The dollar stabilized against the Swiss franc at 0.7906 francs, after it had earlier fallen to 0.7873 francs in the previous session, which is its lowest level since January 2015.

The euro maintained its stability at 1.1802 dollars, close to its overnight peak of 1.1829 dollars.

Meanwhile, the British pound rose slightly to 1.37435 dollars, approaching its highest level recorded on Tuesday of 1.3787 dollars, which is the highest level for the British currency since October 2021.

The dollar regained some of its losses against the Japanese yen, rising by 0.1% to 143.59 yen, after it had previously dropped by 0.4% in the previous session.