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The US dollar remained under pressure near its weakest levels in almost four years, following comments from President Donald Trump that were widely interpreted by markets as dismissive of the currency’s recent decline. The remarks fuelled further selling of the dollar and supported gains in the yen, euro and sterling, ahead of a closely watched Federal Reserve policy decision.

Currency traders were still responding to heavy dollar selling in the previous session, which pushed the euro above $1.20 for the first time since 2021. Sterling also strengthened sharply, rising 1.2 percent to reach its highest level in more than three years.

The dollar index, which tracks the US currency against six major peers, edged 0.22 percent higher to 96.114 after falling more than 1 percent a day earlier and touching a four-year low of 95.566. Market sentiment shifted after President Trump described the dollar’s value as “great” when asked about its recent weakness. Traders took this as confirmation that the administration was not concerned about further declines.

The comments arrived at a sensitive moment for the currency, with investors already wary of potential coordinated action by US and Japanese authorities to stabilise the yen. Kyle Rodda, senior market analyst at Capital.com, said the latest moves reflected a deeper loss of confidence in the dollar, adding that ongoing uncertainty around US trade, foreign and economic policy could prolong the weakness.

The dollar fell by more than 9 percent during 2025 and has continued to slide at the start of this year, down around 2.3 percent in January. Investors have been unsettled by concerns over the Federal Reserve’s independence, rising public spending and unpredictable shifts in US trade and diplomatic strategy.

Attention now turns to the Federal Reserve’s policy announcement later today. The central bank is widely expected to leave interest rates unchanged, with markets anticipating an extended pause that could run beyond Chair Jerome Powell’s final meetings in March and April. Political pressure surrounding the central bank has added to the uncertainty, including speculation over Powell’s successor, efforts to remove Fed Governor Lisa Cook and a criminal investigation involving the Fed leadership.

Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities, said markets appear to believe the administration is allowing the dollar to weaken as part of a broader economic strategy aimed at stimulating growth ahead of the midterm elections.

The Japanese yen benefited further from the softer dollar, rising more than 1 percent to a three-month high of 152.10 per dollar before easing slightly. Recent gains have been driven by reports of rate checks by US and Japanese authorities, often viewed as a signal of possible intervention. Japan’s finance minister said the government stood ready to act if necessary, while declining to comment directly on recent currency movements.

Elsewhere, the Australian dollar climbed to $0.70225, its strongest level since February 2023. The move was supported by broad dollar weakness and fresh data showing consumer inflation accelerating in the December quarter, reinforcing expectations of a near-term rate increase from the Reserve Bank of Australia.

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