Published by Global Banking & Finance Review®
Posted on April 22, 2025
3 min readLast updated: January 24, 2026
Add as preferred source on GoogleThe dollar gains as Scott Bessent forecasts easing US-China trade tensions. Concerns over Fed independence and Trump's criticism impact the currency market.
By Hannah Lang
(Reuters) -The dollar regained some ground on Tuesday after U.S. Treasury Secretary Scott Bessent said in a closed-door meeting that he believes there will be a de-escalation in U.S.-China trade tensions.
Bessent said neither side sees the status quo as sustainable, adding that the Trump administration's goal was not to decouple the world's two largest economies, according to a person who heard his presentation to investors at a JP Morgan conference.
The U.S. dollar index, which measures the greenback against six other major currencies, was up 0.6% at 98.937, after sinking as low as 97.923 in the previous session, a level not seen since March 2022.
"There are signs that pressure is mounting on the White House to calm things down," said Adam Button, chief currency analyst at ForexLive.
The dollar hovered around multi-year lows versus the euro and the Swiss franc on Tuesday as President Donald Trump's attacks on the Federal Reserve raised concerns about the central bank's independence.
Doubts about Fed independence threaten the dollar's value as a reserve currency, with analysts noting possible divestments from what many consider over-exposure to U.S. assets.
Trump ramped up his criticism of Fed chief Jerome Powell on Monday, calling him a "major loser" and demanding that he lower interest rates "NOW" or risk an economic slowdown.
"The firing of Jerome Powell would be catastrophic for the U.S. dollar and confidence in U.S. capital markets in general," said Button.
On Friday, White House economic adviser Kevin Hassett said the president and his team were continuing to study whether they could fire Powell, who said last week the central bank can afford to be patient in judging how to set policy.
"The current worst-case scenario for the greenback is that Powell caves in and delivers an emergency rate cut, although that remains a low-probability event," said Francesco Pesole, strategist at ING.
Barclays lifted its euro/dollar forecast to $1.15 based on the assessment of the removal of the Fed chair as a low-likelihood event, but argued that further revisions could therefore soon be needed should the situation escalate.
China on Monday accused Washington of abusing tariffs and warned countries against striking a broader economic deal with the United States at its expense.
The dollar was up 0.42% at 141.470 yen, after earlier falling below the psychological 140 level for the first time since mid-September.
While some analysts bet Washington will pressure Tokyo to help prop up the yen, Japan sees little scope for direct action.
"Underlying dynamics differ and the yen's rise looks more fragile than the euro's," said Shusuke Yamada, forex strategist at BofA Japan, after flagging that both currencies gained about 12% against the U.S. dollar.
"The yen's rise has accompanied a bigger rise in speculative positioning and increasing focus on a potential U.S.-Japan currency deal," while "structural outflows from Japan have gone out of market radar," he added.
The greenback rose 1.17% to 0.819 Swiss franc, having reached a decade-low of 0.8042 in the previous session.
The euro fell 0.73% to $1.1424, after jumping to $1.1573 on Monday for the first time since November 2021.
(Reporting by Hannah Lang in New York; additional reporting by Stefano Rebaudo; Editing by Kirsten Donovan, Bernadette Baum and Andrea Ricci)
The article discusses the dollar's rise following forecasts of de-escalation in US-China trade tensions.
Scott Bessent's comments on de-escalation in US-China trade tensions boosted market confidence, strengthening the dollar.
Concerns about the Federal Reserve's independence and Trump's criticism of its policies are impacting the dollar's value.
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