The U.S. dollar showed signs of recovery against major currencies on Wednesday as President Donald Trump backed away from earlier threats to fire Federal Reserve Chair Jerome Powell and signaled a potential easing of trade tensions with China.
Investors, who had been rattled by concerns over the Fed’s independence, found some relief after Trump said he had no intention of removing Powell, although he expressed a desire for more aggressive interest rate cuts.
The shift in tone from the White House helped the dollar rebound after weeks of hovering near three-year lows. The currency gained over 1% against the Japanese yen in early Asian trading, climbing to 143.21 before settling around 142.085.
It also strengthened 0.6% against the Swiss franc to 0.8245 and edged up against the euro, which slipped 0.18% to $1.1397 amid weak euro zone business activity and a contraction in Germany’s private sector.
Markets reacted cautiously, however, as Trump’s fluctuating stance on key economic issues continued to inject uncertainty. While the dollar benefited from the latest statements, its longer-term outlook remains clouded by inconsistent trade and monetary policy signals.
Trump and U.S. Treasury Secretary Scott Bessent both indicated that ongoing negotiations with China could lead to a significant reduction in tariffs. Trump suggested that a final trade agreement would lower tariffs on Chinese goods but confirmed that some level of duty would remain.
Meanwhile, Bessent emphasized that the goal was not to decouple the two economies but to reach a more sustainable trading relationship.
In addition to China, the Trump administration has paused the implementation of steep import taxes on dozens of countries for 90 days to allow negotiations. Eighteen countries have submitted proposals so far, with meetings scheduled with representatives from 34 nations this week.
In cryptocurrency markets, bitcoin surged over 2% to $93,661, crossing the $90,000 threshold for the first time since March, as digital assets continued to draw interest amid global economic uncertainty.
