EUR/USD jumped 0.35% during the Asian trading session on Monday, and is trading near 1.1680 at the time of writing, after bouncing from one-month lows of 1.1620. News that the US government is trying to launch a criminal investigation into Federal Reserve Chairman Jerome Powell has weighed on the US dollar (USD). However, rising tensions in Iran are supporting the safe-haven US dollar, capping the euro’s gains.
The New York Times reported that Powell is under criminal investigation over his testimony before a Senate committee regarding renovations to the Federal Reserve building. Powell responded with a video, calling the investigation “unprecedented” and calling it a series of threats aimed at bending the central bank’s arm to lower interest rates.
The economic calendar is weak on Monday, but in this context, Atlanta Fed President Rafael Bostic’s speech will be watched with particular interest. Later this week, the release of US CPI data, scheduled for Tuesday, and a slew of speeches from Fed officials may shed more light on the path of interest rate cuts by the Fed. On Wednesday, the US Supreme Court ruling on tariffs imposed by US President Donald Trump could have a major impact on the US dollar.
Euro price today
The table below shows the percentage change of the Euro (EUR) against the major currencies listed today. The euro was the strongest against the US dollar.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | -0.40% | -0.25% | -0.02% | -0.25% | -0.23% | -0.33% | -0.53% | |
| euro | 0.40% | 0.15% | 0.37% | 0.15% | 0.16% | 0.07% | -0.13% | |
| GBP | 0.25% | -0.15% | 0.23% | 0.00% | 0.02% | -0.08% | -0.28% | |
| JPY | 0.02% | -0.37% | -0.23% | -0.23% | -0.22% | -0.31% | -0.51% | |
| Canadian | 0.25% | -0.15% | -0.00% | 0.23% | 0.02% | -0.08% | -0.28% | |
| Australian dollar | 0.23% | -0.16% | -0.02% | 0.22% | -0.02% | -0.10% | -0.30% | |
| New Zealand dollar | 0.33% | -0.07% | 0.08% | 0.31% | 0.08% | 0.10% | -0.20% | |
| Swiss franc | 0.53% | 0.13% | 0.28% | 0.51% | 0.28% | 0.30% | 0.20% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select EUR from the left column and move along the horizontal line to USD, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily Summary Market Drivers: US Dollar Declines as Fed’s Independence Questions
- The criminal investigation against Fed Chairman Powell represents a new phase in unprecedented political pressure on the central bank and a message to the next Fed chairman. This undermines the central bank’s independence in setting its monetary policy and erodes the US dollar’s status as a reserve currency.
- Meanwhile, tensions in Iran continue to rise. The Islamist regime’s response to protests in the country has reportedly killed hundreds, and Tehran has threatened to target US military bases if it detects signs of an imminent attack.
- On the macroeconomic front, data released on Friday revealed that the US labor market remains stalled but is not deteriorating further. The unemployment rate fell beyond expectations, raising the possibility that the Federal Reserve will keep interest rates unchanged at its next monetary policy meeting, scheduled for January 27-28.
- Furthermore, Michigan’s preliminary consumer confidence index for January rose to 54.0, from 52.9 in December, beating the 53.5 reading the market had expected. These numbers show the second improvement in a row, indicating a stronger economic outlook and supporting the idea of steady monetary policy at the Fed’s January meeting.
- In the Eurozone, the only noteworthy event on Monday was the Sentix Investor Confidence Index, which showed negative numbers since August. However, the impact of this release is likely to be limited as investors’ focus remains on the US Federal Reserve and US-Iran tensions.
Technical analysis: The EUR/USD recovery is likely to be tested at the 1.1700 area
The EUR/USD pair rose strongly from one-month lows at 1.1620. The pair is still trading within a downward channel from its late December highs, but technical indicators on the 4-hour chart have turned higher.
The Moving Average Convergence-Convergence (MACD) line crossed above the signal line, indicating fading downward pressure, while the Relative Strength Index (RSI) broke above the key 50 level, indicating some improving momentum.
On the upside, the pair is likely to find significant resistance at the confluence of the channel top and the January 7 high near 1.1700. Above from here, the target is the January 6 high at 1.1742. On the downside, the pair has significant support above 1.1615 (low of 8-9 December) before the low of 2 December, near 1.1590.
(The technical analysis for this story was written with the help of an artificial intelligence tool.)
Federal Reserve Bank Questions and Answers
Monetary policy in the United States is shaped by the Federal Reserve Bank (Fed). The Federal Reserve has two missions: achieving price stability and promoting full employment. The primary tool for achieving these goals is adjusting interest rates. When prices rise too quickly and inflation is above the Fed’s 2% target, it raises interest rates, which increases borrowing costs throughout the economy. This causes the US dollar (USD) to strengthen because it makes the United States a more attractive place for international investors to park their money. When inflation falls below 2% or when the unemployment rate is very high, the Fed may lower interest rates to encourage borrowing, which affects the dollar.
The Federal Reserve (Fed) holds eight policy meetings annually, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC meeting is attended by twelve Fed officials – the seven members of the Board of Governors, the New York Fed president, and four of the remaining eleven regional Fed presidents, who serve one-year terms on a rotating basis.
In extreme cases, the Fed may resort to a policy called quantitative easing (QE). Quantitative easing is the process by which the Federal Reserve dramatically increases the flow of credit into a stuck financial system. It is a non-standard policy measure used during crises or when inflation is very low. It was the Fed’s weapon of choice during the Great Financial Crisis of 2008. It involves the Fed printing more dollars and using them to buy high-quality bonds from financial institutions. Quantitative easing usually weakens the US dollar.
Quantitative tightening (QT) is the reverse process of quantitative easing, where the Fed stops purchasing bonds from financial institutions and does not reinvest capital from bonds it holds outstanding, to purchase new bonds. This is usually positive for the value of the US dollar.
