Forex analytics. The dollar came under repression – ForexNews.PRO
The calm before the storm. The US dollar has been spending the past year in a state of complete calm. However, the internal tension is felt by the skin. 2026 is unlikely to be calm. What the potential cancellation of the White House tariffs by the Supreme Court and the dismissal of FOMC member Lisa Cook are worth. They create uncertainty in the markets, the main source of which in 2025 was the US president.
Donald Trump is having trouble again. He said that Jerome Powell should resign. He would gladly fire the Fed chairman for cutting rates too late. The owner of the White House supposedly can still do this, but he won’t. The head of the central bank already has little time – his contract expires in May. But the American administration is considering filing a lawsuit for incompetence in the renovation of the Federal Reserve building.
The president’s attacks of this kind have a very specific purpose. Jerome Powell, by law, may remain on the FOMC after resigning as chairman of the Fed. Donald Trump needs to fill the Committee with his own pigeon people. The more of them there are, the higher the chances of aggressive monetary policy easing.
The White House intends to continue financial repression when various tools are used to artificially reduce the profitability of treasuries. Pressure on the Fed chairman is one of them, because expectations of a resumption of the cycle of monetary expansion lead to a drop in debt market rates. However, the list does not end there.
The Treasury needs to finance a big and beautiful tax reduction law. To do this, it is necessary to find buyers for new bond issues. It calls on banking regulators to facilitate their acquisition by commercial banks, and requires issuers of stablecoins to provide tokens with promissory notes. Scott Bessent estimates that the capitalization of the stable currency market could grow 10-fold from the current $300 billion.
If we add to this the Fed’s return to treasury purchases, initially in the amount of $40 billion per month, the White House’s plans become more than clear. The artificial containment of Treasury bond yields is unlikely to appeal to the US dollar. Especially in conditions when other central banks intend to keep rates down, and Japan and Australia may raise them altogether.
Yields on foreign bonds will rise, while American ones will stand still due to repression. This will result in an outflow of capital from the United States and a weakening of the US dollar.
