The dollar is highly valued largely from the promise of its central banks to repay debts - for which the US has a strong reputation of upholding. Now that the Fed is playing games with people's expectations of their plans for interest rates (to scare the market and lower demand without raising rates in proportion), they are also poised to devalue the repayment of their loans while indicating that they will not devalue those repayments.
So in combination with inflation that will take a depression to squash, the trust which made the U.S. dollar the global reserve currency in the first place is also eroding, but leveraging their reputation is a tactic impossible to resist when the Fed is as cornered as they are.
Economic despair is a powerful weapon the Fed can flash at markets - but they don’t desure to pull the pin. The more they threaten high interest rates the more they can slow demand driven inflation without cutting off credit to their most desperate debtors - the traders profiting off of cheap credit can be scared off while the companies whose employment rests on tight margins of debt have no choice but to stay as long as possible.
Right now the Fed is seeing how much they can get done just blowing the speculators off their perch, and it is working. The issue is that to avoid economic depression, they may be forced go back on their rate hikes promise; the cost of threatening rate hikes without following through is the market’s trust in dollar repayments. Even if they pull off the magic trick of wrangling inflation sans the damage caused by real rate hikes, they will cheapen their relationship with those who issue debt in response to the Fed’s apparent conviction.
Likewise, the US sanctions on Russia likely won’t be a grand mistake causing the Dollar to lose global reserve currency status, but it does decrease the demand from countries which now have less reason to trust they can financially realize what they were promised based on geo-political reasons. Whether this strategy is moral or effective does not stop the value from losing its abstract quality of trust which helped cement it as a relatively premium currency.
And this is all without touching on the motive a government with a massive fiscal deficit has to pay it off in real terms through the devaluation of the currency it’s denominated in. It seems the lowest class and the highest powers alike prefer inflation, but right now, the Fed has a reputation to uphold…