Powell may be replaced ahead of time, the dollar falls, and the euro approaches a four-year high.

On Thursday, the exchange rate of the US dollar against the euro and the Swiss franc fell to multi-year lows, as concerns about the future independence of the Federal Reserve weakened confidence in the stability of US monetary policy. Reports suggest that US President Trump is considering selecting and announcing a successor to Federal Reserve Chairman Powell before September or October, aiming to weaken his influence. Powell's term as Federal Reserve Chairman still has 11 months remaining. Nick Rees, Macro Research Director at Monex Europe, said, "From a market perspective, this not only damages the credibility and independence of the Federal Reserve, but also poses risks to the outlook for US interest rates. These concerns have affected the movement of the dollar today." Rees added that pressure on the currency may intensify following the termination of the suspension of equivalent tariffs with trade partners including the EU on July 9th. Trump called Powell "very bad" on Wednesday for not significantly reducing interest rates, while Powell stated in the Senate that policy must be cautious as the President's tariff plans pose risks to inflation. The market has raised the probability of a rate cut at the Fed's July meeting to 25%, up from 12% a week ago, and expects a cut of 64 basis points by the end of the year, compared to around 46 basis points last Friday. The US dollar faced widespread pressure, with the euro rising 0.6% to $1.1729, its highest level since September 2021. The pound rose 0.65% to $1.3753, its highest level since October 2021; while the US dollar against the Swiss franc fell to its lowest level in nearly a decade at 0.7983. Additionally, the Swiss franc against the yen also reached a new high at 180.55 overnight. However, after a decline in the previous trading day, safe-haven currency, the yen, strengthened across the board. Rees stated, "From the yen's perspective, traders are just waiting for the next move by the Bank of Japan. We believe the rate path will be more moderate, but we do think it will support the continued appreciation of the yen in the medium term." The Bank of Japan raised short-term rates to 0.5% in January and indicated readiness for further hikes. However, policymakers, in the minutes of the Bank's June policy meeting released on Wednesday, mentioned the uncertainty of the impact of US tariffs on the Japanese economy as a reason to temporarily maintain rates stable. The US dollar fell nearly 1% against the yen to 143.91; the dollar index fell to its lowest level since early 2022 at 97.09. As the deadline for Trump to reach a trade agreement on July 9th approaches, his erratic tariff policy is once again under scrutiny. JPMorgan warned on Wednesday that the impact of tariffs will slow US economic growth and raise inflation, leading to a 40% chance of an economic recession. Analysts at JPMorgan stated in their report: "The risk of more negative impacts is increasing, and we expect US tariff rates to increase further. The ultimate result of these situations is that our baseline scenario accounts for the end of the US exceptionalism phase." The end of exceptionalism is a major factor in the recent depreciation of the US dollar, as investors question its status as the dominant reserve currency and its prominent safe-haven role among various currencies. Meanwhile, a survey released on Tuesday showed that managers of tens of trillions of dollars in reserves assets managed by major central banks are considering shifting funds from the US dollar to gold, euro, and the renminbi. According to a report by the Official Monetary and Financial Institutions Forum (OMFIF) on Tuesday, a third of central banks managing a total of $5 trillion in assets plan to increase their gold investments in the next one to two years, with this proportion reaching at least a five-year high after excluding those planning to reduce investments. OMFIF stated that the US dollar, which was the most popular in last year's survey, has now fallen to seventh place this year; 70% of respondents indicated hesitancy towards investing in the US dollar due to the country's political environment, more than double last year's proportion. In terms of currencies, the euro and renminbi are expected to benefit the most from reducing dependence on the US dollar. According to the OMFIF survey, the average share of the dollar in global forex reserves is expected to be 52% by 2035, still the largest reserve currency, but down from the current 58%.