Commerzbank: Given the challenges facing the Federal Reserve, the dollar's recovery potential is limited

Commerzbank says there is limited room for the dollar to recover given the challenges facing the Federal Reserve. With Fed Chair Jerome Powell likely to struggle to navigate between appropriate monetary policy and political imperatives, the dollar's position will continue to be "difficult and volatile." President Trump has repeatedly called for interest rate cuts, criticizing Powell's cautious stance on policy easing. On Monday, he fired Fed Governor Lisa Cook, raising new concerns about the Fed's independence. This, combined with other structural factors such as a deteriorating U.S. fiscal position, means the dollar is unlikely to return to its previous strength.