Dollar Rebounds as Trump Cools Fed Talk, Calms Tariff Tensions

​After weeks of political pressure and market volatility, the U.S. dollar finally caught a break.

The greenback rallied sharply on Tuesday, climbing as much as 1% against the yen and Swiss franc, after President Trump walked back threats to fire Federal Reserve Chair Jerome Powell. The move restored some faith in the Fed’s independence and helped reverse a steep drop in the dollar that had made headlines just days earlier​.

Also helping the rebound: U.S. stock futures surged, easing demand for haven assets. Traders began unwinding bearish dollar bets, which had hit oversold levels following the currency’s worst annual start in over 20 years.

“The dollar is rallying on Bessent’s China comments and news of Trump not looking to remove Powell—all great for risk sentiment on U.S. assets,” said Billy Leung of Global X ETFs. That sentiment helped soothe broader market nerves and slowed capital outflows from U.S. stocks and bonds.

Top FX strategist Valentin Marinov said the dollar’s slide may ease in the coming quarter, even as the trade war continues to chip away at its reputation as a safe haven.

​Bottom line: A calmer Trump and a hands-off Fed message gave the dollar a breather—but with trade tensions still looming, the rebound may not last long without deeper policy clarity.