US Dollar Faces Pressure as Fed Chair Powell Faces Criminal Probe

Dollar Index Retreats Amid Uncertainty

The US dollar index, which measures the greenback's strength against six major currencies, dropped 0.3% to 98.899 on Monday, ending a five-day winning streak ¹

. The decline came after news broke that US prosecutors had initiated a criminal investigation into Federal Reserve Chair Jerome Powell, adding to tensions between the Fed and the Trump administration.

Market Reactions and Economic Implications

Powell described the threat of criminal charges as a "pretext" aimed at pressuring the Fed to align its policies with the Trump administration's preferences. He warned that such actions could undermine the central bank's ability to set interest rates based on economic conditions rather than political influence ²

. The dollar also faced downward pressure from speculation about potential further interest rate cuts by the Federal Reserve this year, following Friday's nonfarm payrolls report that showed job growth below expectations for December.

Looking Ahead: Key Economic Data and Market Drivers

Investors are now focusing on upcoming inflation data and major bank earnings reports this week for further guidance. Meanwhile, markets are also assessing geopolitical risks amid growing protests in Iran and increasing uncertainty in South America ²

.