EUR/USD rallies above 1.1500 as investors doubt over USD’s credibility.

EUR/USD passes 1.1550 as US President Trump aims to remove Fed Chair Powell for not reducing interest rates.
Escalating questions over the Fed’s independence have increased doubts over the USD’s credibility.
The ECB is expected to cut interest rates again in the June meeting.

EUR/USD breaks to near 1.1575 at the start of the week, the highest level seen in three-and-a-half years. The major currency pair strengthens as the US Dollar (USD) falls further due to escalating doubts over its safe-haven status. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, refreshes a three-year low near 98.00.

The remarks over Federal Reserve (Fed) Chair Jerome Powell’s termination by United States (US) President Donald Trump have shaken the credibility of the US Dollar and US assets, which had already faltered due to erratic headlines over tariff policies by Washington.

On Friday, US President Trump argued to replace Jerome Powell for not reducing interest rates despite lowering Oil and grocery prices. “The Fed really owes it to the American people to get interest rates down. That’s the only thing he’s good for,” Trump said and added, “I am not happy with him. If I want him out of there, he’ll be out real fast, believe me.”

Fears of the ousting of Jerome Powell and an eventual consequence on the independence of the Fed escalated after White House economic adviser Kevin Hassett confirmed that the President and his team are looking for possible ways to fire Powell. “The President and his team will continue to study that matter,” Hassett said on Friday.

On that matter, Chicago Fed Bank President Austan Goolsbee said in an interview with CBS’s “Face the Nation” on Sunday that we should not move ourselves into an environment where “monetary independence” is in question, warning that it would undermine the “credibility of the central bank”. Goolsbee added that economists agree that central banks that have the “ability to conduct monetary policy with no political tampering” have “better outcomes for their economies”.