On April 21, 2025, the US dollar index (DXY) continued its downward trend, hitting a intraday low of 98.164, a 1.03% drop from the previous trading day’s closing price, setting a three-year low since April 2022. As a result, the euro/dollar exchange rate soared to 1.1485, the pound/dollar broke through 1.3350, and the yen/dollar strengthened to 141.80 due to expectations of Bank of Japan intervention. Behind this exchange rate storm is the collective launch of a “super long defense war” by multinational American companies – companies such as Apple and Tesla have extended their currency hedging cycle from the usual 3-6 months to 2-5 years, setting a rare record in nearly a decade. The spot gold price has broken through 3390 US dollars per ounce, up 1.68% from the previous day, setting a new historical high. Market concerns about the “US dollar credit crisis” have further intensified.

The game of control over the Federal Reserve between the Democratic Party and the White House has heated up: Senate Democratic leader Chuck Schumer publicly warned on April 18 that if Trump forcibly fired Powell, the US stock market may repeat the mistakes of Black Monday in 1987. At the same time, the gold market remained unscathed in the policy storm, with spot gold hitting a historic high of $3357.74 per ounce and then falling back to around $3327 per ounce, while Wall Street hedge funds suffered epic losses – according to Bloomberg statistics, 90% of top tier funds lost over 15% within the year, Citadel、 The weekly drawdown of giants such as Renaissance Technology reached 8% -12%. The core of this “political market” dual storm is the economic “stagflation trap” triggered by Trump’s tariff policy and the approaching critical point of the Federal Reserve’s policy shift.

The Trump administration announced on April 14th the launch of a “national security tariff investigation” on the semiconductor and electronics supply chain, which directly impacted the global industrial chain, causing a 3% drop in US stock futures and a drop in the US dollar index below the 99.01 mark. At the same time, the US CPI rose 2.4% year-on-year in March, which was lower than expected, but the increase in import costs caused by tariffs has led the market to bet on a 75% probability of a rate cut in June. Federal Reserve Chairman Powell is caught in a dilemma between “anti inflation” and “anti recession”, with only 50 basis points left in his policy toolbox for interest rate cuts, and the market exclaims that “the Federal Reserve’s bullets have run out”.