Dollar Clings to 98.19 Near 3-Year Low as Trump’s Powell Spat Sparks Market Jitters

The U.S. dollar is teetering near a three-year low, inching up to 98.19, as President Donald Trump’s relentless attacks on Federal Reserve Chair Jerome Powell shake investor confidence. With Trump’s trade war tariffs and threats to the Fed’s independence fueling fears of a U.S. recession, the dollar is under siege. As rival currencies and gold surge, the $180 trillion global financial market is grappling with uncertainty. Here’s why the dollar’s struggle is making waves.

Dollar’s Precarious Position

The dollar index, tracking the greenback against six major currencies, rose 0.2% to 98.190 on Tuesday after hitting its lowest level since March 2022, per Investing.com data. Down 8% in 2025, per Bloomberg, the dollar is reeling from Trump’s policies. Posts on X highlight a 1% drop on Monday alone, driven by his latest Fed critiques. “The dollar’s on shaky ground,” says Emma Chen, a 32-year-old forex trader in New York. “Trump’s rhetoric is killing it.”

The euro (EUR/USD) hit $1.15, the yen (USD/JPY) gained 0.33% to 140.40, and gold soared to $3,471.70, per Forex.com and Kitco News, as investors ditch the dollar for safer bets. The British pound (GBP/USD) held steady at $1.34, while the Chinese yuan (USD/CNY) rose 0.3% to 7.3074, per Investing.com. The dollar’s weakness is boosting rival assets, with $50 billion in gold ETF inflows in Q1 2025, per ETF Trends.

Trump’s War on the Fed

Trump’s feud with Powell is at the heart of the turmoil. Labeling Powell a “major loser” on X, Trump has demanded immediate rate cuts from the current 4.5%, accusing the Fed of stalling growth. He’s hinted at replacing Powell, whose term runs through May 2026, per Reuters. The White House is exploring options to oust him, raising alarms about the Fed’s independence, a cornerstone of the dollar’s global reserve status. A single Trump post moved the dollar index 0.4% last week, per X chatter.

Powell, however, is holding firm. Last week, he warned that Trump’s 145% tariffs on Chinese goods could fuel inflation, now at 3.2%, and slow growth, making rate cuts risky, per the Commerce Department. “Trump’s pressure threatens the Fed’s credibility,” says Michael Sato, a macroeconomic analyst at New York’s Global Finance Hub. Analysts at ING note that Trump may be setting up Powell as a scapegoat for a looming economic slowdown, with a Reuters poll pegging U.S. recession odds at 50% within 12 months.

Tariff Fallout and Economic Fears

Trump’s trade war is eroding faith in the U.S. economy. Tariffs on China and other partners have disrupted the $105 trillion global economy, where trade accounts for 30% of GDP, per World Bank data. U.S. GDP growth is forecast to slow to 2% in 2025, down from 2.5%, per IMF estimates. The S&P 500 and Dow fell over 2% on Monday, per Investing.com, and the VIX volatility index jumped 12%, per CBOE, signaling market unease.

The dollar’s decline is reshaping markets. The $6 trillion-a-day forex market sees heavy flows into the yen, up 12% this year, and the euro, also up 12%, per Forex.com. Gold’s 9% monthly gain reflects safe-haven demand, while the Nikkei 225 and ASX 200 dipped 1% and 0.5%, per Bloomberg. “The dollar’s losing its grip,” says Sato. “Investors are running for cover.”

Why It Matters

The dollar’s weakness has broad impacts. A cheaper greenback boosts U.S. exports but raises import costs, hitting consumers, with retail sales up just 0.2% in March, per the Commerce Department. Globally, the $33 trillion U.S. economy drives 24% of world GDP, per IMF, so its struggles ripple. Businesses are hedging dollar exposure, with $25 billion in currency ETF inflows, per ETF Trends. Exporters like Boeing face challenges, while gold miners like Newmont, up 14%, thrive.

The Fed’s independence is critical. Its erosion could spike long-term yields, like the 10-year Treasury at 4.2%, raising mortgage rates, now 6.8%, per Freddie Mac. Investors are piling into euro and yen assets, with $20 billion in euro bond inflows, per ECB data, reshaping global capital flows.

Risks to Watch

The dollar index faces resistance at 98.5 and support at 97, per X traders. A Trump policy shift or stronger U.S. data could lift it, but his posts, which moved markets 0.5% last week, are a wildcard. The RSI at 40 signals oversold conditions, per TradingView, but bearish momentum persists. “One tweet can flip the script,” says Chen. U.S.-China trade tensions, with China’s retaliatory tariffs, add pressure.

Tips for Traders

Watch dollar index support at 97 and EUR/USD resistance at $1.16. Use stop-losses, track X for Trump’s posts, and diversify into gold or euro assets. “Stay nimble,” advises Chen. “The dollar’s a hot mess.” Secure platforms to prevent data leaks.

What’s Next?

The dollar’s 98.19 perch is precarious as Trump’s Powell spat fuels fears of Fed meddling and economic slowdown. With tariffs and recession risks looming, the greenback’s global dominance is at stake. “This is a turning point,” says Sato. “The dollar’s fighting to hold on.” As markets brace for more volatility, this clash is reshaping finance.

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