The decision to remove US Federal Reserve Chairman Jerome Powell has created uncertainty in global markets. As investor confidence has declined, questions are being raised about the stability of US monetary policy. Its direct impact is already being seen in the value of the dollar.


The US dollar fell to its lowest level against the euro in nearly four years on Thursday (June 26), according to the Wall Street Journal.


According to US media reports, US President Donald Trump is considering replacing Fed Chairman Jerome Powell in September or October and appointing a new one. News of such a plan is increasing uncertainty in the market.


Analysts say that indications of political interference in the Fed are creating a crisis of confidence among investors. This is not only affecting the credibility of the Fed, but also the market is losing clarity about future interest rates.


Nick Rees, head of macro research at Monex Europe, said that this is not only a question of the Fed's independence, but also a great deal of uncertainty about the future direction of US interest rates. This is why the pressure on the dollar increased further on Thursday. Especially since the US's 'reciprocal tariff' agreement with the European Union is due to expire on July 9 - this has also created new concerns.


Earlier, US President Donald Trump and Federal Reserve Chairman Jerome Powell exchanged views on Wednesday. Powell said that Trump's tariff policy could prolong inflation, so the Fed should be more careful in cutting interest rates. And Trump called Powell "terrible" and said that he has three to four options to put him at the top of the Fed.


Due to the impact of these events, the market is now assuming that the US Federal Reserve may cut interest rates in July. A week ago, this probability was only 12 percent, and now it has increased to 25 percent. Market analysts also believe that interest rates may be reduced by a total of 64 basis points by the end of the year, which was 46 points the previous week.


As a result, the value of the euro rose to $ 1.1729, which is the highest since September 2021. The value of the British pound increased by 0.65 percent to $ 1.3753, which is the highest since October 2021. In addition, the dollar has also fallen to its lowest level in a decade against the Swiss franc.


However, the Japanese yen has strengthened again after a slight decline the previous day. The yen is gaining traction as a safe investment. Investors are now looking ahead to the next decision of the Bank of Japan. In January, the organization raised short-term interest rates by 0.5 percent. Now there are indications that it may increase further in the future.


Nick Rees said, we think the Bank of Japan will move slowly, but even that slow pace is enough to maintain the yen's appreciation.


Overall, political pressure on the Fed and uncertainty about global trade have given a big blow to the dollar's stability. And the euro, pound, yen and franc are gaining strength in that opportunity.