The USD is lower on concerns about Fed independence. EURUSD & GBPUSD break to 2025 highs

The USD is lower vs all the major currencies to start the US trading day.

According to sources cited by the Wall Street Journal, President Trump may accelerate the announcement of a successor to Fed Chair Jerome Powell, potentially as early as this summer or by September or October. The move would give the chair-in-waiting time to shape investor expectations ahead of Powell’s term ending. Potential candidates include former Fed Governor Kevin Warsh, National Economic Council Director Kevin Hassett, Treasury Secretary Scott Bessent, former World Bank President David Malpass, and current Fed Governor Christopher Waller. The Fed Chair in waiting – if Powell does not resign – would likely lead a Shadow Fed Board which would speak loud about cutting rates with Pres. Trump pulling the strings.

The USD moved lower as investors fear the lack of independence from the Fed and the expectations that rates would move sharply lower. The USD also broke technically.

Looking at the changes vs the USD of the major currencies, the greenback is lower vs each of them:

• EUR -0.33%. The EURUSD traded to new high going back to September 2021
• JPY -0.58%
• GBP -0.26%. The GBPUSD traded to a new high going back to October 2021.
• CHF -0.36%. The USDCHF traded to the lowest level since April 2011
• CAD -0.28%.
• AUD -0.26%
• NZD -0.18%

IN the video above I take a look at the technicals driving the three major currency pairs – the EURUSD, USDJPY and GBPUSD given the breaks in each today..

In other central bank news overnight:

• Bank of England Governor Andrew Bailey emphasized that a gradual and cautious approach to rate cuts remains appropriate, given current economic conditions. He reiterated that monetary policy is not on a pre-set course, though interest rates are expected to follow a measured downward trajectory. Bailey noted that policy must stay restrictive long enough to ensure inflation risks are sufficiently contained and sustainably on track toward the 2% target. He also pointed to growing evidence of economic slack, particularly in the labor market, while acknowledging that recent short-term increases in inflation add uncertainty to the outlook.
• ECB’s Isabel Schnabel highlighted that trade conflicts are generating uncertainty in both the economy and financial markets, though the growth outlook remains broadly stable and medium-term inflation is near the 2% target. She noted that the monetary policy tightening cycle is nearing its end, with inflation expected to dip temporarily before stabilizing at target levels. Schnabel warned that energy prices and exchange rates can swing inflation quickly, and that tariffs, through global value chains, pose upside risks. While supply chain disruptions remain a concern, she sees limited trade diversion from China to the EU. She stressed that inflation expectations are still fragile and must be monitored. Additionally, she emphasized the importance of innovation and risk capital to counteract sluggish potential growth following the global financial crisis, citing structural issues like aging populations and high public debt. Finally, she called for removal of internal trade barriers to unlock the full benefits of the EU’s single market and strengthen the euro’s international role.
• ECB Vice President Luis de Guindos remarked that markets have remained surprisingly calm despite ongoing geopolitical tensions. He added that the euro’s international role could strengthen if the European Union advances with structural reforms, suggesting that further integration and policy progress could enhance the currency’s global standing.

Looking at the US stock market, the major indices are higher after mixed results yesterday saw the Dow industrial average falling -106 points, the S&P closing unchanged, and the NASDAQ index up 61 point

• Dow industrial average +111 points
• S&P index +23 points
• NASDAQ index +106 points

in the US debt market

• 2-year yield 3.764%, -1.5 basis points
• 5-year yield 3.836%, -2.1 basis points
• 10 year yield 4.273%, -2.0 basis points
• 30 year yield 4.824%, -1.8 basis points

In other markets:

• Crude oil is trading up $0.25 at $65.17
• Gold is trading near unchanged at $3333
• Silver is trading up $0.34 at $36.56
• Bitcoin is trading near unchanged at $107,406

On the US economic calendar today :

• US durable goods orders will be released at 8:30 AM ET with expectations of a gain of 8.5% versus -6.3% last month.
• US GDP final for the first quarter is expected to come in at -0.2% with core PCE prices up 3.4%.
• US initial jobs claims are expected at 245K unchanged from last week
• US advanced goods trade balance is expected to come in at $-88.5 billion versus $-87.62 billion last month
• US wholesale inventories and retail inventories will also at 8:30 AM ET
• US pending home sales are expected to rise by 0.1% versus -6.3% last month. That will be released at 10 AM