Dollar Slips as Trump Eyes Early Powell Replacement

​The U.S. dollar fell sharply on Thursday as traders reacted to growing speculation that President Donald Trump might announce a replacement for Federal Reserve Chair Jerome Powell well before Powell’s term ends in 2026.

The Bloomberg Dollar Index dropped to its lowest level in over three years, extending its 2025 losses to more than 8%. The market is reading Trump’s move as a signal that rate cuts may come sooner and be deeper than previously expected.

Trump Tightens the Pressure
The idea that Trump could name a new Fed chief by September or October has rattled the currency markets. He has long criticized Powell for refusing to lower rates faster, accusing the Fed of keeping borrowing costs too high, especially as inflation cools and tariffs squeeze growth.

The speculation has shifted focus away from Powell’s authority and toward the incoming chair, weakening Powell’s influence in the eyes of investors.

“It’s a dovish tilt,” said one Sydney-based fund manager. “Everyone’s attention is shifting to who comes next.”

Treasuries, Dollar Under Pressure
Treasuries also slipped, with investors concerned that a more politically-aligned Fed could undermine policy independence. Meanwhile, the greenback weakened across the board, falling against all major peers—most notably the Taiwanese dollar, South Korean won, and South African rand.

Markets are now pricing in 66 basis points of rate cuts by year-end, up from 51 just a week earlier. Traders believe the possibility of a rate cut as early as July is rising.

Potential Replacements in Focus
The short list for Powell’s successor reportedly includes Fed governor Kevin Warsh and National Economic Council director Kevin Hassett, both of whom are viewed as more aligned with Trump’s vision for aggressive monetary easing.

And while no official announcement has been made, Trump confirmed he has “three or four people in mind.”

Bottom line: The dollar’s drop isn’t just about interest rates—it’s about credibility. With Powell’s position under public political pressure and Trump openly previewing a leadership shakeup at the Fed, investors are bracing for a more dovish pivot—and repositioning fast.