US Dollar collapses to fresh three-year lows as Fed independence questioned

• The US Dollar Index (DXY) trades near the 98.50 area after a sharp decline during Monday's session.
• Concerns rise after Trump criticizes Powell, sparking fear over Fed's independence and further damaging USD sentiment.
• Technical indicators show sustained bearish momentum with resistance seen around 98.65 and 100.38.

The US Dollar Index (DXY) trades deep in the red on Monday, sliding toward the 98.50 region and marking a new three-year low. The sharp drop follows escalating market concerns over the Federal Reserve's (Fed) institutional integrity after US President Donald Trump again publicly criticized Fed Chair Jerome Powell and confirmed he is exploring ways to remove him. Trump accused Powell of manipulating interest rates for political purposes in 2024 and described him as "too late" in reacting to economic conditions.

Amid rising global uncertainty and deteriorating confidence in US monetary leadership, Gold surged to a new all-time high near $3,425 per ounce, benefiting from safe-haven demand and a collapsing Greenback. The broader sentiment remains risk-averse with traders reassessing the Dollar's long-term reserve status amid unpredictable trade and fiscal policies.

Daily digest market movers: Threats to Fed rattle markets

• Gold's explosive rally above $3,400 underscores the rush to safe-haven assets as political interference fears escalate in the US.
• President Trump's repeated attacks on Fed Chairman Powell -- alongside reports that his administration is examining legal avenues to remove him -- have rattled investor confidence.
• The DXY's drop to the 98.00 zone reflects the market's unease with a potentially politicized central bank. Comments from White House advisor Kevin Hassett and Trump's Truth Social posts have only deepened the perception of a hostile stance toward monetary independence.
• Analysts at Scotiabank warn that undermining the Fed could weaken inflation-fighting credibility, which might lift inflation expectations and pressure the USD even further.

Technical analysis

The technical backdrop for the DXY remains heavily bearish. The pair trades around 98.50, near the bottom of the daily range (97.92-99.21), showing a strong negative bias. The Relative Strength Index (RSI) has dropped to 24.22, entering deeply oversold territory, while the Moving Average Convergence Divergence (MACD) continues to print a sell signal.

Bearish sentiment is confirmed by the positioning of key moving averages: the 20-day Simple Moving Average (SMA) at 102.26, the 100-day at 106.04, and the 200-day at 104.63 -- all trending lower. The 10-day EMA at 100.38 and SMA at 100.69 further reinforce resistance above current levels.

Key resistance levels are noted at 98.65, followed by 100.38 and 100.69. While some short-term oscillators like the Ultimate Oscillator (37.76) and Awesome Oscillator (−3.54) appear neutral, the dominant structure remains clearly negative.

Unless political clarity is restored or risk sentiment shifts, the DXY appears poised for further downside.