Senator Warren's statement is a vivid illustration of growing concern about possible political interference in the independence of the Federal Reserve System. The dismissal of the current Fed chair, his criminal prosecution, and the appointment of a loyal candidate, as Warren claims, could undermine confidence in the central bank and lead to decisions driven by personal or political interests rather than economic considerations.
Warren's argument echoes the concerns of many economists and politicians about the importance of preserving the Fed's autonomy. Central bank independence is seen as a guarantee that monetary policy decisions will be based on objective data and analysis rather than short-term political goals.
Reaction to Warren's accusations is likely to be divided along party lines. Republicans will most likely argue that the president has every right to appoint individuals who share his economic vision, while Democrats will likely focus on defending the Fed's independence and warning against potential corruption. However, it is worth noting that several Republican senators have already voiced support for Powell, also criticizing Trump's actions.
Janet Yellen, Ben Bernanke, Alan Greenspan, and 10 other former senior officials also condemned the Justice Department's investigation into current Fed Chair Jerome Powell, calling it an unprecedented attempt to undermine the independence of the central bank. Former officials who held key positions in the U.S. financial system expressed serious concern over the investigation into Powell, noting that such actions set a dangerous precedent. In their view, the Justice Department interference in the activities of the Federal Reserve undermines trust in an institution that plays a crucial role in maintaining the stability of the country's economy.
In a joint statement released on Tuesday, the group emphasized that the Fed's independence from political pressure is necessary for effective monetary policy management and for ensuring macroeconomic stability. Interference in central bank decision-making could lead to unpredictable consequences for the economy, including inflation and financial instability. The fact that such influential figures as Yellen, Bernanke, and Greenspan signed the statement adds extra weight to it and underscores the seriousness of the situation.
But regardless of political affiliation, the debate surrounding the Fed's independence highlights the importance of transparency and accountability in monetary policy. The public must be confident that the Fed's decisions serve the best interests of the economy as a whole, rather than a select group of individuals. Against the backdrop of all these developments, and with support from such influential politicians, the dollar has regained some ground against risk assets that it lost at the very beginning of the week.
As for the current technical picture in EUR/USD, buyers now need to think about how to take the 1.1650 level. Only this will allow them to target a test of 1.1680. From there, it would be possible to climb to 1.1710, but doing so without support from major players will be quite difficult. The furthest target would be the 1.1740 level. In the event of a decline in the trading instrument, I expect any serious action from large buyers only around the 1.1630 level. If no one shows up there, it would be better to wait for an update of the low at 1.1610 or to open long positions from 1.1591.
As for the current technical picture in GBP/USD, pound buyers need to take the nearest resistance at 1.3450. Only this will allow them to target 1.3480, above which breaking through will be quite difficult. The furthest target would be the 1.3515 level. In the event of a drop in the pair, bears will try to seize control of 1.3420. If they succeed, a break of the range will deal a serious blow to the bulls' positions and push GBP/USD down to the 1.3390 low, with the prospect of moving on to 1.3370.