empty
22.04.2025 09:00 AM
Loss of Confidence in the Fed Will Pressure the Dollar (Bitcoin Likely to Continue Rising, USD/CAD to Decline)

On Monday, the U.S. stock market experienced a sharp decline, pulling down many global exchanges, as the "turbulent" actions of President Trump continue to shift from one hot topic to another.

Donald Trump once again intensified his criticism of Federal Reserve Chairman Jerome Powell, raising concerns about the central bank's independence and shocking investors. On his social network Truth Social, he called Powell a "lagging gentleman and a big loser," urging him to cut interest rates immediately. This unprecedented pressure for the U.S. came just days after Trump suggested he might consider removing Powell from his post. The growing pressure on the Fed triggered a plunge in U.S. equities and further weakened the dollar in the Forex market.

Markets are already under constant stress due to uncertainty over global trade, particularly with China. This added strain on the Fed appears to be seriously undermining investor confidence. Negotiations between Washington and Beijing show little progress and are increasingly marked by rising tensions.

Why is Trump pressuring the Fed, and what is he aiming to achieve?

I touched on this topic in yesterday's article and will now briefly summarize it again. Trump believes that the revival of the real U.S. economy cannot happen amid a strong dollar relative to other currencies. Since he cannot lower wages, he targets the dollar's value. A weaker dollar gives U.S. goods a competitive edge in global markets. That's one reason. The second is that lower interest rates open the door for faster economic growth, albeit at the risk of higher inflation. Trump is prioritizing economic growth—by any means necessary. Hence, there is pressure on the Fed, with the potential to replace Powell with someone more compliant.

In light of recent events, the dollar is under the most intense pressure in years. On Monday, the dollar index fell below the 98.00 mark—the lowest level since February 2022. With trust in the Fed eroding, demand for U.S. assets—dollars and Treasuries—is increasingly viewed as less reliable and less of a safe haven due to mounting uncertainty over the Trump administration's policies.

The yield on 10-year Treasuries at the time of writing stood at 4.429%. While not at the local high of 4.800% seen on January 13, 2025, it still worries market participants, forcing them to dump government bonds. Another major concern is China's high likelihood of large-scale Treasury sales amid the ongoing trade war, which could crash the U.S. government bond market and plunge U.S. finances into chaos.

What can we expect from the markets today?

It seems the previously initiated negative trend will persist. It may continue to pressure the dollar in Forex and the U.S. equity market while supporting the cryptocurrency market and gold prices locally. At the same time, a further deterioration in the situation may force Trump to "blink" and begin adjusting his geopolitical and economic stance, fearing a collapse of the national economy due to what his opponents see as excessively drastic reforms and radical policy shifts.

Forecast of the Day:

This image is no longer relevant

This image is no longer relevant

Bitcoin

The cryptocurrency is gaining support from two factors: the significant weakening of the dollar in Forex, the avoidance of dollar-denominated assets, and the transfer of some capital into crypto. Bitcoin may continue rising to 92,796.25 if it breaks above 88,731.00, escaping the wide range of 83,024.25–88,731.00. A buying point could be the level of 88,894.58.

USD/CAD

The pair is trading near the 1.3800 level amid overall dollar weakness and relative stabilization in crude oil prices. If it drops below this mark, it could continue falling toward 1.3700 and 1.3600. A suitable entry point for selling the pair could be 1.3789.

Pati Gani,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Has Common Sense Prevailed? (High probability of #SPX growth and a drop in gold prices)

On Monday, the United States announced "significant progress" in trade talks with China following a two-day meeting in Switzerland over the weekend. Markets reacted to this news with a gap-up

Pati Gani 11:00 2025-05-12 UTC+2

GBP/USD. An Important Week for the Pound

The GBP/USD pair is again under pressure due to the broad strengthening of the U.S. dollar. Last week, the pound attempted to break into the 1.34 zone in reaction

Irina Manzenko 10:49 2025-05-12 UTC+2

The Market Will Face Reality

How quickly things change on the financial markets! Before America's Liberation Day, investors viewed the 10% universal import tariff as disastrous. Now, it's seen as the most favorable option

Marek Petkovich 09:18 2025-05-12 UTC+2

What to Pay Attention to on May 12? A Breakdown of Fundamental Events for Beginners

There are no macroeconomic events scheduled for Monday. Fundamental developments will also be limited, but at this point, it is entirely unclear which factors are influencing price formation. The pound

Paolo Greco 06:51 2025-05-12 UTC+2

EUR/USD. Weekly Preview. Prepare for Price Turbulence

The upcoming week promises to be volatile. First, the market will react to the results of the Geneva meeting between representatives of the US and China. Second, key reports

Irina Manzenko 05:34 2025-05-12 UTC+2

GBP/USD Overview – May 12: Business as Usual...

The GBP/USD currency pair moved slightly higher on Friday, although the British pound had no real reason to grow that day or throughout the week. Let us recall that

Paolo Greco 03:48 2025-05-12 UTC+2

EUR/USD Overview – May 12: The Dollar's Success Is Unstable

The EUR/USD currency pair slightly rebounded upward on Friday, and overall, it has been gradually sliding down for several weeks. The movement has been so sluggish that we recently classified

Paolo Greco 03:48 2025-05-12 UTC+2

US Dollar. Weekly Preview

The U.S. economic calendar for the upcoming week won't be overloaded with data. If we leave out the secondary reports, only April's Consumer Price Index (CPI) remains, which will

Chin Zhao 00:59 2025-05-12 UTC+2

British Pound. Weekly Preview

The wave pattern of the pound and the market's interest in the news currently reflect those of the euro. Last week, the market had a chance to reduce demand

Chin Zhao 00:59 2025-05-12 UTC+2

Euro Currency. Weekly Preview

Will the news background have any real significance in the upcoming week? In my opinion, the market seems largely uninterested in economic and fundamental data. Consider this: major events like

Chin Zhao 00:59 2025-05-12 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.