Euro sharply rises amid Trump's attacks on the Fed: what will happen to the dollar.

The euro exchange rate reached its highest level since November 2021, rising to $1.15. Throughout April, the euro strengthened by over 5% against the dollar due to investor doubts about the dollar's future and demand for the euro as an alternative. Additionally, an increase in defense spending, particularly in Germany, is also supporting the euro.

Federal Reserve Chairman Jerome Powell warned that new tariffs could slow economic growth and a potential change in monetary policy is being discussed. In response, Donald Trump criticizes Powell and urges him to lower interest rates like the European Central Bank.

In light of these events, the European Central Bank lowered the deposit rate, believing that economic prospects are deteriorating due to trade conflicts. It is expected to drop three more times by the end of the year.

Analysis

Given the independence of the U.S. Federal Reserve, investors are turning to the euro as an alternative to the dollar, which is leading to its strengthening. Moreover, the increase in defense spending in Germany is contributing to the support for the euro. However, the conflict between Powell and Trump could lead to instability in the currency market. Currently, the euro is an attractive alternative for investors, but it is important to closely monitor further developments.