Trump Has Chosen a Candidate to Replace Powell

[Ben Graham]

While the U.S. dollar continues to lose ground against a number of risk assets, President Donald Trump has announced that he has decided on a candidate for the next chair of the Federal Reserve, making it clear what he expects from his nominee regarding interest rates.

"Yes, I know who I will choose," Trump told reporters, without revealing his pick. "We will announce it soon."

According to many media reports, it is Kevin Hassett, Director of the White House National Economic Council and Trump's chief economic adviser, who is being considered as the likely successor to Powell.

It's worth recalling that Trump has repeatedly criticized current Fed Chair Jerome Powell for failing to cut interest rates quickly enough and has made it clear that he wants someone in the role who will push more aggressively for rate reductions.

Against this backdrop, many market participants are now wondering how independent the new Fed Chair will be and how susceptible they might be to pressure from the Trump administration. The market has already reacted to the potential leadership change at the Fed, showing increased volatility. Investors fear that political interference in monetary policy could lead to unpredictable consequences for the economy.

Trump has repeatedly criticized current Fed Chair Jerome Powell for keeping interest rates too high, claiming that they restrain the country's economic growth. Appointing Hassett — known for views aligned with the president's — could signal a shift in the Fed's course toward a more accommodative monetary policy. This, in turn, could weaken the dollar and support risk assets. However, a too sharp reduction in interest rates could overheat the economy and spark inflation, which Powell has been actively fighting in recent years.

The independence of the Federal Reserve is a key factor ensuring the stability of the U.S. financial system. Attempts at political pressure on the central bank could undermine investor confidence and lead to capital outflows. The official announcement of the new Fed Chair is expected in the coming days. This decision will have a significant impact on financial markets and the U.S. economy, as well as on the global economic situation as a whole.

Speaking earlier, Hassett refused to say whether he considers himself the frontrunner to replace Jerome Powell as Fed Chair, calling such reports rumors. However, he pointed to the market's positive reaction to news that Trump appears close to naming his candidate. "We had an excellent Treasury auction, interest rates fell, and I think the American people can expect President Trump to choose someone who will help them get cheaper auto loans and easier access to mortgages at lower rates," Hassett said. "That is exactly what we saw in the market's reaction to the rumors about me."

In addition to Hassett, the finalists include Fed Governors Christopher Waller and Michelle Bowman, former Fed Governor Kevin Warsh, and BlackRock's Rick Rieder. Trump has also repeatedly said he would like to see Bessent as chair, although Bessent himself has repeatedly rejected the idea.

As for the current technical picture of EUR/USD, buyers now need to figure out how to take control of the 1.1625 level. Only this will allow them to aim for a test of 1.1655. From there, it may be possible to climb to 1.1680, but doing so without support from major players will be quite difficult. The farthest target is the high of 1.1715. If the instrument declines, I expect significant buying interest only around 1.1590. If no one shows up there, it would be best to wait for the renewal of the 1.1560 low or to open long positions from 1.1530.

As for the current technical picture of GBP/USD, pound buyers need to take the nearest resistance at 1.3230. Only then will they be able to aim for 1.3250, above which breaking through will be quite difficult. The farthest target will be the 1.3270 level. If the pair falls, the bears will attempt to regain control of 1.3200. If they succeed, breaking below this range will deal a serious blow to the bulls' positions and push GBP/USD toward the 1.3177 low, with the potential to reach 1.3150.

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