EUR/USD Rises Toward 1.1700 as Fed Independence Concerns Weigh on US Dollar

EUR/USD Rises Toward 1.1700 as Fed Independence Concerns Drag Down the US Dollar

The EUR/USD currency pair extended its bullish momentum in Thursday’s early Asian session, climbing toward the 1.1700 mark and trading around 1.1690. The move comes as the US Dollar (USD) continues to weaken amid rising investor concerns over the Federal Reserve’s independence and ahead of key US Q1 GDP data.

Trump Eyes Fed Chair Replacement, Raising Policy Credibility Concerns

According to a report from the Wall Street Journal, US President Donald Trump is considering making an early announcement regarding a replacement for Fed Chair Jerome Powell, with potential candidates including:

• Kevin Warsh – Former Federal Reserve Governor
• Kevin Hassett – Director of the National Economic Council
• Scott Bessent – Treasury Secretary candidate
• David Malpass – Former World Bank President
• Christopher Waller – Current Fed Governor

Trump’s dissatisfaction with Powell, rooted in the Fed’s policy stance and inflation handling, has raised concerns that a leadership change could undermine the Fed’s independence, reducing its credibility in financial markets.

Market Reaction and Economic Outlook

These developments have pressured the US Dollar Index (DXY), pushing it to multi-month lows. The weakening of the Greenback has supported the euro’s rally, with EUR/USD benefiting from safe-haven flow diversions and speculative repositioning ahead of upcoming data releases.

Investors are now closely watching the final US Q1 Gross Domestic Product (GDP) Growth Rate, set to be released later today. The figure is expected to offer further insight into the economic strength of the United States and could influence the Federal Reserve’s future monetary policy direction.

A weak GDP print could reinforce expectations of rate cuts, especially amid rising political interference in Fed operations, further pressuring the Dollar and boosting EUR/USD.

Key Technical Levels – EUR/USD

• Resistance: 1.1700, 1.1745
• Support: 1.1650, 1.1600

The bullish outlook remains intact as long as EUR/USD stays above 1.1650. A sustained break above 1.1700 could open the door for further gains toward the 1.1750 level.

Conclusion

The EUR/USD pair’s advance to near 1.1700 reflects broad US Dollar weakness, driven by fears of a politicized Fed and concerns over a potential loss of credibility in US monetary policy. With key economic data due shortly, the currency market is poised for volatility.

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