Forex analytics. The dollar goes where the eyes look – ForexNews.PRO
Donald Trump risks swapping awl for soap. The US president wants to appoint a Fed chairman who will insist on lowering the federal funds rate. He is doing everything possible to ensure that the current head of the central bank not only leaves his post, but also resigns from the FOMC. Ironically, it was thanks to Jerome Powell that the Fed eased monetary policy in December. And most likely, in October. His departure will remove a strong “dove” from the Committee.
The minutes of the last FOMC meeting in 2025 showed not only the split that everyone knew about, but also the influence of Jerome Powell. The Fed could have easily left rates at the same level in December if it hadn’t been for the chairman. 6 out of 19 members voted against easing monetary policy. Many of those who remained hesitated. Some of them noted that the reduction in borrowing costs could have been misinterpreted by the markets. As a signal that the Fed is no longer interested in inflation.
Donald Trump wants to appoint a puppet to the post of chairman of the Fed. Curiously, in 2017, he chose Jerome Powell, who seemed outwardly soft-spoken, to replace Janet Yellen. The president was sure that this man would easily break down under his influence. It so happened that the factor of increasing pressure from the White House on the Fed became one of the drivers of the decline in the USD index in the Republican’s first year in power. In 2025, history repeated itself. The US dollar has produced one of the worst annual dynamics in the history of free-floating exchange rates.
Investors believe that the downward trend in greenback will continue in 2026. The paths of the Fed and other major central banks diverge. The Federal Reserve is still in monetary easing mode, while its counterparts from other countries are set to hold down rates and even raise them. As a result, Wall Street banks forecast a EURUSD rally to 1.2 by the end of next year.
Fans of the dollar are betting on accelerating economic growth in the United States thanks to huge investments in artificial intelligence and a large and beautiful tax reduction law. This will limit the Fed’s ability to ease monetary policy.
In the short term, the strengthening of the greenback is due to the lack of any direction in the actions of the Federal Reserve. He took a break in the cycle of monetary expansion. The ECB also operates in the “let’s sit and see” mode. The gap in rates in the United States and Europe is playing on the side of the US dollar.
