Chart of the day - USDIDX (12.01.2026) 🏛️

The political war over the Fed is undermining the credibility of American institutions, with the dollar becoming the first victim. The prosecutors' investigation into Jerome Powell and the threat of indictment for allegedly misleading testimony on the costly renovation of Fed buildings is, in effect, an attempt to intimidate the central bank, undermining confidence in the independence of US monetary policy. Powell himself says outright that this is a pretext, and what is at stake is whether rates will be set based on data or political pressure from the president, which sounds like a red alert to investors. No wonder capital is fleeing to "safe havens": gold is breaking records, the Swiss franc is strengthening, and the dollar is slumping after its recent rally. For the FX market, this is a signal that the premium for US institutional stability has just been eroded by policies targeting the Fed chief.

Statement from Federal Reserve Chair Jerome H. Powell - Federal Reserve Board - Chair Powell's official statement can be found here.

The fundamental context only increases pressure on the dollar. On the one hand, the economy continues to show signs of relative strength – non-farm employment is stabilising, unemployment is falling slightly, and Sahm's rule no longer points to a recession, so the Fed has no urgent need for further rate cuts. On the other hand, the White House is trying to bypass the central bank: ideas such as the purchase of USD 200 billion in MBS by Fannie and Freddie or limiting credit card commissions to 10% are de facto quasi-QE and fiscal and political interference in areas that traditionally belonged to the Fed. The market therefore sees a mixture: a tougher interest rate path, rising inflation expectations and Trump's increasingly "creative" pre-election policy – from aggression towards Powell and Lisa Cook to seeking military and fiscal "victories" before the vote. In such an environment, the dollar is no longer the obvious king of the G10, as investors begin to price in not only rates and data, but also the risk that politics will begin to steer the central bank like another ministry.

At the beginning of the week, the USDIDX dollar index fell below the 100-day EMA (purple curve on the chart) and is currently testing the 50-day EMA (blue curve on the chart). Until the index returns above Friday's highs, the downward trend will technically prevail on the chart. The RSI for the 14-day average is returning to around 54 points. Source: xStation