Clash between Powell and Trump continues

[Ben Graham]

The clash between Powell and Trump continues, and it is surprising that not all Republican senators are aligned with the sitting president.

The political confrontation around the Federal Reserve is intensifying and threatens the stability of financial regulation. Yesterday, Senator Tillis's statement provoked an outcry in political circles, and his hardline stance could significantly complicate the confirmation of new Fed nominees.

Pressure on Fed Chair Jerome Powell and the potential paralysis of the regulator have long raised concerns in the business community.

Experts warn that uncertainty about the Fed's future leadership could harm the investment climate and financial?market stability, and the situation is compounded by criminal proceedings against the current Fed chair.

Divergences among Republicans highlight the depth of the party's split over the Fed's role and independence. Some senators support an investigation into Powell and favor strict oversight of the regulator's actions, while others fear the politicization of this vital institution and the possible economic fallout.

The situation is further complicated by the approaching midterm elections for Congress, where the Fed is likely to become a central campaign issue. Democrats accuse Republicans of trying to destabilize the financial system for political gain, while Republicans insist on stronger oversight of the Fed to protect taxpayers' interests.

Developments at the Fed will be watched closely both in the United States and abroad because any instability in the US financial system could have global consequences. It will soon become clear whether the Senate can find a compromise and avoid paralyzing the regulator, or whether the political confrontation will escalate further, threatening the country's economic stability. It is worth noting that the current Fed chair's term expires in May this year, and Mr. Trump has not yet officially announced whom he plans to nominate for the post.

Regarding the current technical picture for EUR/USD, buyers should now consider reclaiming the 1.1680 level. Only that would allow them to target a test of 1.1705. From there, a climb to 1.1725 is possible, although achieving that without support from major players would be rather difficult. The farthest target will be the high at 1.1740. In the event of a decline, I expect significant buying interest only around 1.1640. If there is no one there, it would be advisable to wait for an update of the low at 1.1619 or to open long positions from 1.1591.

As for GBP/USD, its buyers need to capture the nearest resistance at 1.3475. Only that will allow them to target 1.3490, above which a breakout will be difficult. The extended target is around 1.3520. If the pair falls, bears will try to seize control at 1.3450. If they succeed, a break of that range will deliver a serious blow to bullish positions and push GBP/USD down to 1.3420 with scope to extend to 1.3390.

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