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EUR/USD Holds Ground Near 1.1500 as US Dollar Falters Under Trump’s Political Pressure on the Fed
Economic
Summary:
EUR/USD is holding steady near 1.1500 as political drama in the US undermines the Dollar’s credibility.
Buy
CLOSEDEURUSD
End Time
1.14900
Entry Price
1.18000
TP
1.13000
SL
1.12497 +0.00226 +0.20%
1900
Points
Loss
1.13000
SL
1.13000
CLOSING
1.14900
Entry Price
1.18000
TP
The EUR/USD pair remains firm around the 1.1500 mark during European trading on Tuesday, as a weakening US Dollar continues to reel from political shocks stemming from President Donald Trump’s renewed attacks on Federal Reserve Chair Jerome Powell. The tension between the White House and the Fed has deepened, leading to investor concern over the credibility and independence of one of the world’s most influential central banks.
This isn’t just another routine clash between fiscal and monetary policy. Trump’s aggressive rhetoric, amplified via his TruthSocial platform, is shaking investor confidence in the institutional integrity of the Fed. On Monday, he labeled Powell as “Mr. Too Late,” accusing him of endangering the US economy by refusing to cut interest rates amid what Trump called “trending downward costs.” Trump warned of an impending economic slowdown unless immediate rate cuts are enacted, igniting concerns over political interference in monetary policy—a line traditionally respected in democratic systems.
"With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW," Trump wrote.
Powell, however, has remained steadfast. The Fed Chair continues to argue for a cautious approach, advocating to maintain interest rates in the current 4.25%-4.50% range until inflationary pressures are better understood in the wake of recent fiscal shifts. His resistance to political pressure has now placed the Fed at the center of a contentious power struggle that could have sweeping consequences for the US economy and the Dollar's status as the global reserve currency.
The US Dollar Index (DXY), which measures the Greenback against a basket of major currencies, recently dipped to a fresh three-year low near the 98.00 handle, and market participants are finding few reasons to expect a quick recovery. Investors fear that undermining the Fed’s autonomy could deteriorate the US’s financial credibility on the global stage.
Adding fuel to the fire, Trump has reportedly explored the possibility of removing Powell before the end of his term a legally murky area that, if pursued, could trigger a constitutional crisis and further destabilize financial markets. While legal experts argue that Trump’s ability to oust Powell is limited, the mere threat is enough to rattle sentiment and drive capital away from US assets.
Across the Atlantic, the Euro is trading with cautious optimism. The European Central Bank (ECB) is widely expected to cut interest rates in June, with dovish sentiment increasing due to persistent downside risks to inflation and a deteriorating economic outlook. Analysts at Citi, for example, forecast Eurozone inflation at 1.6% in 2026 and 1.8% in 2027 both below the ECB’s 2% target.
In a recent press conference following the ECB’s seventh rate cut in the current easing cycle, President Christine Lagarde acknowledged that the Eurozone’s economic trajectory is “clouded by uncertainty,” citing weakening business investment and ongoing global trade disruptions.
The ECB is walking a delicate line aiming to provide monetary stimulus while avoiding further Euro weakness that could stoke imported inflation. But with global trade turmoil threatening to weigh on Europe’s export-heavy economy, more cuts are likely on the horizon.
Back in the US, Trump’s volatile trade policy isn’t helping the Dollar’s case. The former president recently announced a 90-day suspension on executing reciprocal tariffs, a move interpreted by markets as a tactical pause in an ongoing trade war rather than a meaningful de-escalation. The US-China conflict continues to cast a long shadow, with American importers bearing the brunt of higher tariffs—a cost that will ultimately be passed onto consumers, eroding household purchasing power and potentially stalling domestic demand.
The US Dollar’s traditional role as a safe-haven asset is now under threat. Political meddling, erratic trade policy, and looming inflationary risks are tarnishing the appeal of the Greenback, driving investors toward alternative stores of value, including the Euro.
Technical Analysis
From a technical standpoint, EUR/USD continues to trade within a clearly defined ascending channel, forming a pattern of higher highs and higher lows—an indicator that bullish momentum remains intact. After breaking out above the key 1.1480–1.1500 resistance zone, the pair is now consolidating just above the trendline, as if coiling for another upward thrust.
Immediate resistance is seen at 1.1566, followed by 1.1701 if the bullish breakout materializes. Both the 34-period and 89-period exponential moving averages (EMAs) are trending upward, confirming a structurally sound medium-term uptrend.
On the hourly chart, the pair has entered a sideways consolidation phase, but with price action holding firmly above the EMA50 and the Relative Strength Index (RSI) flashing oversold signals, a bounce from current levels looks increasingly likely. The formation of bullish overlapping signals strengthens the case for a continuation of the rally.
TRADE RECOMMENDATION
BUY EURUSD
ENTRY PRICE: 1.1490
STOP LOSS: 1.1300
TAKE PROFIT: 1.1800
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