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The dollar fell sharply on Wednesday after Bloomberg, citing an unidentified White House official, reported U.S. President Donald Trump is likely to fire Federal Reserve Chair Jerome Powell soon.

The dollar fell by as much as 0.7% against a basket of major currencies in a matter of moments after the news hit, while rate-sensitive areas of the market such as U.S. regional banking shares fell and gold rallied.

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LEE HARDMAN, SENIOR CURRENCY ANALYST, MUFG, LONDON:
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"It’s not clear-cut whether Trump has the power to fire Powell, so we would expect to see a legal challenge very quickly, but even if it were overruled, the hit to confidence would be long lasting, and it reinforces our bearish outlook on the dollar."

Supreme Court allows Trump to fire members of independent agency boards — for now, NPR, May 22, 2025

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The vote was 6-3 with the liberals in dissent.

While the decision is technically a temporary one, its tone is pretty final. The language of Thursday's two-page unsigned order clearly forecasts the eventual outcome of the case when it is argued before the court, likely next year. For example, there is a carve-out for the Federal Reserve, essentially insulating it from the order. The idea the president could fire members of the Fed has spooked markets. And that has been the fly in the ointment of those who want to corral federal agencies and make all the commissions, like the SEC and the FTC, subject to firing at will by the president.