The U.S. dollar experienced a decline from its peak in a month early on Monday, following the initiation of a criminal investigation by U.S. prosecutors into Federal Reserve Chair Jerome Powell, which heightened tensions with the Trump administration. The dollar index, which gauges the strength of the greenback against a basket of six currencies, was last observed at 98.899, reflecting a decline of 0.3% and ending a five-day winning streak. Gold surged to an unprecedented $4,563.61 per ounce following a report by the New York Times regarding the investigation, coupled with Powell’s video statement affirming the central bank’s autonomy. “Powell has had enough of the carping from the sidelines and is clearly going on the offensive,” stated Ray Attrill. The ongoing conflict between the Federal Reserve and the U.S. administration, particularly if one interprets Powell’s remarks literally, certainly presents a negative image for the U.S. dollar.

The dollar strengthened in early Asian trading following Friday’s jobs report, which reinforced expectations that the Federal Reserve will maintain interest rates later this month. Meanwhile, reports of significant casualties during protests in Iran have increased geopolitical tensions and heightened the demand for safe havens.”This should be positive for the U.S. dollar, but we haven’t seen any upside there yet,” stated Kyle Rodda. “The inquiry moving forward is whether the momentum sustaining the protest movement persists, and whether the regime intensifies its crackdown, potentially paving the way for some U.S. involvement.” The financial markets are gearing up for a week filled with significant data, highlighted by the release of the U.S. consumer price index for December on Tuesday.

This report stands as one of the final crucial economic indicators ahead of the Federal Reserve’s upcoming monetary policy meeting at the end of January.U.S. inflation continues to exceed the Fed’s target of 2.0%, which could constrain the FOMC’s capacity to implement additional rate cuts unless there is a significant decline in the U.S. economy’s momentum,” analysts noted on Sunday, indicating that further rate cuts are improbable. “The labour market is not deteriorating further, and this should – at the margin – maintain some upward pressure on both U.S. Treasury yields and the U.S. dollar.” Major banks are set to commence the fourth-quarter earnings season in the upcoming week, with robust profit growth this year serving as a vital source of optimism for equity investors. A decision from the Supreme Court regarding the legality of Trump’s emergency tariffs may be announced as early as Wednesday.

In relation to the yen, the U.S. dollar was last noted at 157.56 yen, reflecting a decrease of 0.2%. This movement comes as it retreats from its peak in a year, following comments from the leader of Japanese Prime Minister Sanae Takaichi’s coalition partner, who indicated the possibility of a snap election on February 8 or 15. On Friday, reports indicated that she was contemplating a vote within the month, according to government sources. The euro is currently 0.2% stronger at $1.1664, recovering from a one-month low. In the offshore market in Hong Kong, the U.S. dollar experienced a decline of 0.1% against the Chinese yuan, settling at 6.968 yuan, marking its weakest position in a week. The British pound increased by 0.2% to $1.3433, recovering from a one-month low. The Australian dollar appreciated by 0.2% to $0.6704, whereas the New Zealand dollar also saw a 0.2% increase, reaching $0.5746. Bitcoin was last up 1.0% at $91,533.13, while ether edged up 0.3% to $3,127.37.