USD/CHF dips to 14-year lows below 0.8035 amid broad-based Dollar weakness

• The US Dollar extends losses on a revived "Sell America" trade.
• Trump's attacks on Fed's Powell are undermining confidence in the central bank and eroding the US Dollar's reserve currency status.
• Investors' concerns about the negative impact economic impact of tariffs are adding pressure on the US Dollar.

The Swiss Franc rallies further on Thursday reaching levels not seen since October 2021. The USD/CHF breached the 0.8035 level and is approaching the 0.8000 area amid growing concerns about the Federal Reserve's independence.

US President Trump rattled markets on Wednesday, calling Fed Chair "terrible" and an "average mentally person" and suggesting that he might name his replacement well ahead of the end of his term, due in May next year. This would be a highly irregular move, probably creating a shadow chair that would undermine the credibility of the world's major central bank.

Fed Powell maintains its cautious stance against pressures and critics

These critics came after Powell stood firm on the President's pressures to lower interest rates and maintained the bank's "wait-and-see" stance on his semiannual testimony to Congress.

Jerome Powell defended that the bank is well-positioned to react to the highly likely inflationary pressures stemming from Trump's tariffs and refused to signal any rate cut in the near-term in the face of accusations from republican senators of being politically biased.

The speculation about the next Fed chair culminates a large series of attacks from the US President to the Fed chief that are undermining the credibility of the Federal Reserve and fuelling the "sell America" trade, which is eroding the US Dollar's status as the world's reserve currency.

Beyond that, the threat of tariffs remains looming, as the clock ticks towards the June 9 deadline with no progress on trade deals. Investors' fears of the negative impact of unilateral tariffs in an already softening US economy pose additional pressure on the US Dollar.