FX.co ★ Dollar Falls on Fed Independence Concerns

The dollar index edged lower to approximately 98.9 on Monday, marking the end of a four-day upward streak due to federal prosecutors initiating a criminal probe into Federal Reserve Chair Jerome Powell. This development has sparked concerns regarding the central bank's autonomy. Powell labeled the threat of criminal charges as "pretexts" intended to coerce the Fed into aligning its policies with the objectives of the Trump administration. He cautioned that such measures might jeopardize the central bank’s capacity to determine interest rates based strictly on economic indicators, devoid of political interference. The U.S. dollar also encountered downward pressure with anticipation of additional Federal Reserve rate cuts following the disappointing nonfarm payrolls report for December, which revealed job growth falling short of expectations. Investors are now turning their attention to the forthcoming inflation figures and significant bank earnings due this week for additional insights. In other developments, the markets are assessing geopolitical risks amid escalating protests in Iran and growing uncertainty across South America.