empty
22.04.2025 01:07 AM
Will Trump Fire Powell?

The U.S. Dollar Index updated a three-year low on Monday, falling into the 97 range (for the first time since March 2022). The greenback started the trading week with a downward gap amid a nearly empty economic calendar (it is also Easter Monday). Among the reasons for the dollar's sharp decline are the rising risk of a U.S. recession due to the bleak outlook of the trade war and Donald Trump's alleged desire to fire Federal Reserve Chair Jerome Powell. While the former is the key factor weighing on the dollar, the "Trump vs. Powell" conflict is mostly noise—albeit louder than during Trump's first presidential term.

This image is no longer relevant

Many analysts now draw parallels with 2019–2020, when Trump also pressured the Fed Chair, demanding looser monetary policy. At the time, he called for rate cuts and a new round of quantitative easing. Trump openly expressed dissatisfaction with Powell and urged him to resign. The president's team even explored legal options to remove Powell, but the Fed Chair's position is well protected from political pressure. As a result, Trump had to back down.

This year, the story continues. However, direct analogies to 2019–2020 are not entirely appropriate. Trump is now making more radical decisions, Congress is controlled by Republicans, and his inner circle is more loyal to his agenda. Therefore, he may also act more aggressively on the Powell issue.

Under U.S. law, the president cannot fire the Fed Chair at will but can initiate the process. Fed Governors, including the Chair, can only be removed "for cause." Though vague, this term legally refers to serious grounds, such as misconduct or dereliction of duty. Disagreements over monetary policy are not sufficient cause. However, Trump could theoretically claim Powell is professionally incompetent and sign an executive order to remove him. Powell would almost certainly appeal to federal court, which would likely side with him—unless the president presents strong evidence.

Another theoretical path is impeachment, which a member of the House of Representatives could initiate. While impeachment is not limited to presidents or judges and can technically apply to any federal official, such precedents are virtually nonexistent. In Powell's case, it would be extremely unlikely—especially since impeachment requires accusations of major misconduct, such as corruption. Political disagreements don't qualify.

In my view, Trump—despite his willingness to act radically—is unlikely to pursue this battle due to its weak legal foundation, not to mention the extreme market volatility such a move would provoke. According to The New York Times, Trump is leaning toward a wait-and-see approach, as Powell's term ends in May next year. Legal complications and market risks are the main reasons.

It's also worth recalling the events of last fall when Trump's ally Elon Musk called for a "restructuring of the Fed" even before the president's inauguration. Musk supported Senator Mike Lee's demand for Powell's resignation, stating that the Fed has strayed from the Constitution. He argued that the central bank should be subordinated to the executive branch, launching the hashtag #EndTheFed on social media. Those calls caused turbulence in markets (including EUR/USD), but as we see now, no legislative action has followed.

Four months into Trump's new term, there's no sign of reforming the Fed—likely, there won't be. Similarly, Powell's removal will likely remain just another unfulfilled threat.

Conclusion: The market will likely absorb this "fundamental factor" quickly—unless Trump tries to remove Powell with a direct executive order.

Technical outlook: On nearly all timeframes, EUR/USD is between the middle and upper Bollinger Bands (H1, H4, D1) or on the upper band (W1, MN). The Ichimoku indicator has produced a bullish "Parade of Lines" signal on H4 and D1, confirming the priority of long positions. The ongoing U.S.–China trade war and lack of a deal with the EU will keep pressure on the dollar—regardless of the Powell situation. Longs remain relevant. Pullbacks should be viewed as opportunities to open long positions with targets at 1.1550 (upper Bollinger Band on H4) and 1.1600 (upper Bollinger Band on D1).

Irina Manzenko,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

EUR/GBP. Analysis and Forecast

However, at this point, it lacks follow-through buying, despite a fundamental backdrop that suggests the path of least resistance for spot prices lies to the upside. The weak performance

Irina Yanina 11:38 2025-06-11 UTC+2

Results of the Second Round of U.S.–China Negotiations

The United States and China have concluded two days of important trade negotiations with a plan to resume the flow of sensitive goods — this framework now awaits approval from

Jakub Novak 11:32 2025-06-11 UTC+2

The U.S. and China: A Small Step Forward. What's Next? (Potential for a reversal and decline in EUR/USD and NZD/USD pairs)

Representatives from the United States and China have reached a framework agreement on trade following two days of high-level talks in London. But why isn't there a sense of euphoria

Pati Gani 09:52 2025-06-11 UTC+2

The Market Approaches Its Rubicon

The devil is in the details—and the U.S. and China haven't provided investors with those details regarding their newly reached deal. This lack of transparency risks cutting off the momentum

Marek Petkovich 09:18 2025-06-11 UTC+2

What to Pay Attention to on June 11? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic reports are scheduled for Wednesday. Therefore, any sharp reversal or strengthening of movement may only occur at the start of the U.S. trading session, when

Paolo Greco 06:10 2025-06-11 UTC+2

GBP/USD Overview – June 11. What Will Inflation Influence?

The GBP/USD currency pair fell sharply in the first half of Tuesday but retraced back to its original position in the second half. Traders may have assumed in the morning

Paolo Greco 03:31 2025-06-11 UTC+2

EUR/USD Overview – June 11: Even News About Negotiations Doesn't Help the Dollar

The EUR/USD currency pair continued trading sluggishly on Tuesday, maintaining an upward bias. The macroeconomic backdrop has been absent for two days in a row, but there have been some

Paolo Greco 03:31 2025-06-11 UTC+2

Japan Hopes for a Positive Outcome in Trade Negotiations—Otherwise, Recession and Rising Inflation Loom

The revised estimate of Japan's Q1 GDP showed that the economy contracted less than previously estimated, with consumption figures also revised upward. GDP declined by 0.2% year-over-year instead

Kuvat Raharjo 00:21 2025-06-11 UTC+2

GBP/USD: Labor Market Cools Down, But the Pound Holds Its Ground

The UK labor market data published on Tuesday turned out to be unfavorable for the pound. However, the GBP/USD pair is not rushing to dive downward, as the overall weakness

Irina Manzenko 00:21 2025-06-11 UTC+2

The Dollar Is Doomed, Though It Doesn't Know It Yet

In war, all methods are justified. U.S.–China trade negotiations are ongoing in London, and everything is being utilized—from education to rocket engines. Washington is prepared to make concessions, including lifting

Marek Petkovich 00:21 2025-06-11 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.