Washington: US President Donald Trump's tariff policies and statements regarding restructuring the Federal Reserve have contributed to a sharp fall in the US Dollar Index to 97.9, its lowest level since March 2022, following a downward trend that began in February. The euro/US dollar parity rose to its highest level since November 2021, reaching 1.1573. Since the beginning of the year, the euro has increased its value against the US dollar by more than 11%. The surge followed Trump's April 17 statement that he was "not happy" with Fed Governor Jerome Powell and wanted him fired. National Economic Council Director Kevin Hassett said on Friday that the Trump administration is 'studying' ways to fire Powell. Despite recent interest rate cuts by the European Central Bank (ECB), the euro has remained strong. Analysts say the euro is increasingly viewed as a 'safe-haven' currency amid Washington's trade volatility and as Europe ramps up defense spending in response to the war in Ukraine.

According to Anadolu Agency, Cuneyt Paksoy, a Turkish market strategist, noted that the rise in the euro/US dollar parity was both swift and unexpected. He attributed the main reasons for the US Dollar Index's decline and the exchange rate's rise to Trump's tariff crisis and the resulting backlash. Paksoy mentioned that multiple institutions have claimed Trump's protectionist trade policies would harm the US economy in the long term. He highlighted the presence of numerous anti-Trump protests across the country, indicating that despite his election victory, Trump has yet to garner the expected support for his policies.

Paksoy also emphasized that Beijing's statements inferring harsh retaliation against countries aligning with the US in tariffing China have further complicated Washington's position. In addition, he noted that Fed Governor Powell's recent speech addressed significant details regarding US debts and their potential economic risks. Paksoy pointed out that US bonds have lost their safe-haven status as the gap between 2-year and 10-year bonds has widened. Despite negotiations, Trump has not fulfilled his promise to bring peace to Ukraine. Paksoy concluded that Trump's policies have not been well received, leading to weak demand for US assets while the euro continues to strengthen. He added that it is crucial to consider how much the rise in the exchange rate will benefit Europe.