The dollar dived on Monday as investor confidence in the U.S. economy took another hit over President Donald Trump's plans to shake up the Federal Reserve, which would throw into question the independence of the central bank.
White House economic adviser Kevin Hassett said on Friday that the president and his team were continuing to study whether they could fire Fed Chair Jerome Powell, just a day after Trump said Powell's termination "cannot come fast enough" as he called for the Fed to cut interest rates.
The dollar sank to a decade-low against the Swiss franc and slid to its weakest level against the yen in seven months, while the euro surged to a three-year top as an ongoing crisis of confidence in the greenback continued to play out.
Trading was thinned with markets in Australia and Hong Kong closed for Easter Monday. Most markets globally were closed on Friday for a holiday.
"Powell does not report directly to Trump, so (Trump) cannot actually fire him. He can only be removed from office under certain procedures which one would think have a higher barrier... but can the president move the cogs and wheels to undermine the perceived independence of the Fed? Sure, he could," said Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho.
"I would argue that they don't even need to sack Powell immediately. You just need to create the perception that you could fundamentally change the view of an independent Fed."
The euro peaked at $1.153275, while the dollar hit a 10-year trough of 0.80695 against the Swiss franc and last traded 1.1% lower at 140.63 yen .
CFTC data showed net long positions on the Japanese yen hit a record high for the week ended April 15.
Sterling was up more than 0.5% at $1.3380, its highest since October 1, while the Australian dollar hit a two-month high of $0.64015.
"It's really a buffet for any dollar bear... from the heightened uncertainty around the self-harm from tariffs to the loss of faith even prior to the Powell news," Varathan said.
Trump's sweeping tariffs and uncertainty over his trade policies have sent global markets into a tailspin and darkened the outlook for the world's largest economy, in turn weakening the dollar as investors pull money out of U.S. assets.
Against a basket of currencies, the dollar slid to a three-year low of 98.267 on Monday. The New Zealand dollar rose more than 0.7% to a five-month high of $0.5981.
Elsewhere, the onshore yuan was up roughly 0.2% at 7.2875 per dollar, while its offshore counterpart last stood at 7.2897.
China on Monday kept its benchmark lending rates steady for the sixth successive month, matching market expectations. But markets are wagering on more stimulus being rolled out soon in the face of an escalating Sino-U.S. trade war.
