Central Bank Interest Rate Decisions Will Be Independent

[Ben Graham]

Meanwhile, as the U.S. dollar comes under significant selling pressure, the current head of the U.S. National Economic Council, Kevin Hassett—who may also become the future Fed chair—said that if he is selected, he will take into account the political views of President Donald Trump, but central bank interest rate decisions will remain independent.

"The president has very strong and well-grounded views on what we should do," the official said in an interview. "But ultimately, the Fed's job is to be independent and to work with the group of people on the Board of Governors to reach a consensus on what interest rates should be," he said.

Hassett's remarks prompted mixed reactions among experts. Some believe that taking the president's views into account could undermine confidence in the Fed and lead to the politicization of monetary policy. Others, on the contrary, argue that interaction between the government and the central bank can be beneficial for the economy, especially during times of crisis. Nevertheless, preserving independence in interest rate decisions is a key factor in maintaining the stability of the financial system.

While the dollar is going through a difficult period, investors' attention is focused on the Fed's next steps. Any hints of a more dovish interest rate policy could have a significant impact on the U.S. dollar. Let me remind you that Trump and his senior advisers have been pressuring Fed Chair Jerome Powell throughout this year to cut interest rates, while simultaneously considering candidates to replace Powell, whose term as Fed chair expires in May next year.

Hassett is considered the leading contender for the position, although Trump also met last week with former Federal Reserve Governor Kevin Warsh. In a Friday interview, the president named these two men as his top candidates for the Fed chair position. "Soon we will have a good Fed chair who wants to cut interest rates," the U.S. president said.

As for the current technical picture of EUR/USD, buyers now need to focus on how to take the 1.1770 level. Only this would allow them to target a test of 1.1790. From there, a move up to 1.1820 is possible, but achieving this without support from major players will be quite difficult. The most distant target would be the high at 1.1855. In the event of a decline, I expect any serious activity from large buyers only around the 1.1735 level. If no one appears there, it would be better to wait for a retest of the 1.1700 low or to open long positions from 1.1685.

As for the current technical picture of GBP/USD, pound buyers need to take the nearest resistance at 1.3395. Only this would allow them to target 1.3430, above which a breakout would be quite difficult. The most distant target would be the 1.3474 level. If the pair declines, bears will attempt to take control of 1.3355. If they succeed, a break of this range would deal a serious blow to bullish positions and push GBP/USD down to the 1.3320 low, with the prospect of a move toward 1.3285.

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