US Dollar Tumbles After Trump Fires Fed Governor Lisa Cook. Forecast as of 26.08.2025
If the Fed is independent, does it have legal protection? The president has dismissed a member of the FOMC, but she has no intention of resigning. The case of Lisa Cook will provide much-needed clarification. Let’s discuss this topic and make a trading plan for the EURUSD pair.
The article covers the following subjects:
Major Takeaways
- Donald Trump has fired FOMC member Lisa Cook.
- The market doubts that inflation is transitory.
- The “Sell America” strategy is back in vogue.
- Long trades on the EURUSD pair can be opened above 1.165.
Weekly US Dollar Fundamental Forecast
There is nothing more permanent than the temporary. Investors have expressed skepticism regarding Jerome Powell’s statements in Jackson Hole regarding the transitory nature of tariff-induced inflation. Should prices rise in the near future, the positive impact of the federal funds rate cut in September will be temporary. However, the EURUSD pair demonstrated resilience, rebounding following the dismissal of FOMC member Lisa Cook.
The US Federal Reserve is an independent institution. However, does this autonomy have legal protection? In a letter to Lisa Cook, the first Black woman and first person of color to sit on the Board, Donald Trump stated that there was sufficient reason to remove her from office. The Washington Post believes that the US president has the authority to do so. Lisa Cook’s legal counsel is certain that this will not occur. She has no intention of resigning.
The markets demonstrated signs of anxiety. The US 30-year Treasury bond yield surged significantly, indicating rising inflation risks. Yields on 2-year Treasuries fell amid concerns about the Fed’s aggressive monetary expansion. The US dollar experienced a significant decline in value, along with stock indices, amid a resurgence of the “Sell America” narrative.
US Dollar Performance and US Treasury Yield
Source: Bloomberg.
If anyone continues to seek refuge in the greenback, the case of Lisa Cook and the independence of the Fed will likely discourage them from doing so. If Donald Trump’s plans are implemented, he will increase his voice in the FOMC and continue his efforts to lower the federal funds rate aggressively. The US leader is committed to taking every possible measure to strengthen the US economy, while a potential rise in inflation is not a concern.
The US dollar’s role as a safe-haven currency is facing new challenges, which could present issues for the US administration. The US President is planning to implement new tariffs in response to digital services taxes imposed by other countries on American companies. He has launched an investigation with the aim of introducing duties on furniture imports. In addition, the US administration is reevaluating its trade agreement with South Korea. The uncertainty surrounding trade policies remains in the spotlight.
This is a favorable development for Fed doves. If tariffs continue to fall, as in the case of South Korea, from 25% to 15% in exchange for $350 billion in investments, inflation in the US may not rise as much as expected. However, the labor market is expected to slow due to the net outflow of immigrants. In 2023, 3.3 million people entered the US, and in 2024, the number was 2.7 million. In 2025, due to Donald Trump’s anti-immigration policies, the figure can be negative. Apollo estimates that zero net immigration will reduce monthly non-farm employment growth to 24,000. Between 2015 and 2024, the number stood at 155,000.
Weekly EURUSD Trading Plan
The Fed has nothing to do but lower rates amid such figures from the labor market. Against the backdrop of other central banks holding or raising rates, the US dollar will tumble against major global currencies. Therefore, a return of the EURUSD pair above 1.165 is a reason to increase long positions.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of EURUSD in real time mode
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