US Dollar Holds Near Four-Year Low Following Trump’s Comments

The U.S. dollar steadied on Wednesday but remained on track for its largest weekly decline since April, following remarks from President Donald Trump dismissing concerns about the currency’s slide. The dollar index rose slightly to 96.216 but stayed near four-year lows, having lost about 2.7% since last Wednesday. Investors have increasingly moved into other currencies and gold amid growing caution over U.S. exposure.

The euro climbed above $1.20 for the first time since 2021, the British pound reached 4½-year highs, and the Japanese yen was poised for its strongest monthly performance against the dollar since April. Market speculation about potential joint U.S.-Japan intervention to support the yen has supported the currency. Analysts attribute the dollar’s weakness to concerns over Trump’s unpredictable trade and foreign policy, fears about Federal Reserve independence, and rising public spending, despite strong U.S. economic growth estimated at 5.4% in the fourth quarter of 2025.

European central bankers voiced concern over the strong euro. Austrian central bank governor Martin Kocher indicated the ECB may consider another interest-rate cut if the euro’s strength affects inflation, while Bank of France Governor François Villeroy de Galhau said policymakers were closely monitoring the currency’s appreciation and potential impact on lower inflation.

The yen has benefited from the dollar’s weakness, hitting a three-month high of 152.10 per dollar before slightly softening to 152.43. Investors remain cautious about the effectiveness of any intervention, especially with Japan’s snap elections on February 8 and the government’s focus on stimulus measures. In the near term, markets are awaiting the Federal Reserve’s policy decision, with rates expected to remain unchanged until at least mid-year after Chair Jerome Powell steps down.