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Again, in case you missed the headlines from earlier in the day:NYT: Federal prosecutors open probe into Fed chair Powell amid renovation scrutinyFed Chair Powell calls out Trump on his witch hunt, part of ongoing threats against central bankIt’s another start of the week filled with more drama involving US president Trump’s actions. A lively beginning to the 2026 year no doubt.In an unprecedented move, the probe on Fed chair Powell further raises threats to the central bank’s independence. Now, this isn’t anything new. However, it comes at a sensitive period with it being the transition to a new Fed chair in just a couple of months’ time. As a reminder, Powell’s term as Fed chair is due to end after May this year. And he is expected to step down from any other capacity at the central bank after.So with just a couple of months left, what’s the goal here from Trump?It feels like this is mostly about sending a message. The next Fed chair is already likely going to be a Trump plant but this is a broader attack on the central bank and to any policymakers who try to get in the way of what Trump wants done; that being lower interest rates.As fiscal risks continue to grow in the US, this is one spot that Trump wants to micro manage to not look bad. The thing is, at what cost?The dollar is finding that out the hard way with the currency already losing much confidence last year. And the new year looks to be starting off in similar fashion, if this is anything but a reminder.The greenback is now lower across the board today with slight losses seen against the other major currencies. USD/CHF is down 0.5% to 0.7966 while EUR/USD is starting to see buyers wrestle back some near-term momentum on the day. The latter is up 0.3% to 1.1677 with price nudging back above its 100-hour moving average (red line):The pair has been on the descend since a rejection of 1.1800 but this feels like the first time that buyers are looking to make a play to win back some near-term control. Keep below the 100-hour moving average and the near-term bias stays more bearish. But break above, and the near-term bias turns more neutral instead.Elsewhere, USD/CAD is also down 0.3% to 1.3878 and AUD/USD up 0.3% to reclaim the 0.6700 mark once again.The big winners though? Precious metals once again. Gold is now up 1.7% to $4,585 after the strong jump on Friday with silver up another 5% to $84.11 currently. Fire. 🔥
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
The scrutiny on Fed Chair Powell could shake market confidence, and here’s why that matters: With federal prosecutors probing Powell amid renovation allegations, traders should brace for potential volatility. The Fed’s credibility is crucial, especially as we approach key economic indicators like inflation reports and employment data. If Powell’s position comes under fire, it could lead to shifts in monetary policy expectations, impacting everything from interest rates to asset valuations. Watch for how this plays out in the upcoming FOMC meetings, as any hint of instability could trigger a sell-off in equities and a flight to safety in bonds or gold. On the flip side, if Powell manages to navigate this scrutiny effectively, it could reinforce his position and stabilize market sentiment. But right now, the uncertainty is palpable, and traders need to keep an eye on related assets, particularly the US dollar and Treasury yields, which often react sharply to Fed news. Watch for any significant price movements around these assets as the situation develops.
📮 Takeaway
Monitor the US dollar and Treasury yields closely; any instability around Powell could trigger significant market shifts.
