USD weakens as Senator warns Powell firing would hurt US credibility

The US dollar faced selling pressure following Senator Tillis's stark warning that firing Federal Reserve Chair Jerome Powell would undermine US economic credibility. The senator's comments come amid reports of GOP support for potential Fed leadership changes, creating uncertainty in forex markets. Dollar index futures retreated 0.2% as traders reassessed Fed independence risks and potential policy disruption. The political uncertainty adds to existing dollar headwinds from mixed economic data and speculation about the Fed's rate trajectory. Market participants are increasingly concerned that political interference with the Fed could damage the dollar's reserve currency status and trigger capital outflows. Technical indicators show the DXY approaching key support at 104.50, with a break below potentially accelerating dollar weakness across major pairs. Traders should monitor political developments closely as any concrete moves against Powell could spark significant dollar volatility.