15.01.202611:42 Forex Analysis & Reviews: The Fed Must Remain Independent

Yesterday, Chicago Federal Reserve Bank President Austan Goolsbee spoke out in defense of central bank independence, arguing that it is essential for achieving low and stable prices. "The independence of the Federal Reserve System is of paramount importance for the country's long-term inflation rate," Goolsbee said Wednesday in an interview with NPR, just days after Fed Chair Jerome Powell stated that the Department of Justice is conducting a criminal investigation against him.

"Anywhere there is no central bank independence, inflation rises sharply," Goolsbee said. "Over the past five years, we have been fighting to bring inflation down, and it hasn't been easy. And if you encroach on the Fed's independence, it only makes the problem worse."

Let me remind you that this week, Federal Reserve officials and economic policymakers around the world expressed support for the U.S. central bank after the Department of Justice issued subpoenas to the Fed in connection with statements Powell made during congressional hearings last year.

Goolsbee also noted that central bank independence requires a high degree of transparency and accountability. The Fed must regularly report to Congress and the public on its decisions and actions in order to maintain trust and confidence in its policy. He emphasized the importance of open communication and a willingness to engage in dialogue with various stakeholders.

Goolsbee's remarks served as another reminder of the importance of central bank independence in ensuring stable economic development.

On Sunday, Powell issued a statement condemning the actions of the Trump administration, saying the issue is about the Fed setting interest rates based on economic conditions, rather than on President Donald Trump's preference for significantly lower interest rates.

The president of the Chicago Fed also touched on the latest inflation data. In his view, the Consumer Price Index rose less than expected in December, allowing the Fed to proceed in line with its plan. "What interests me is whether consumer demand will continue to be the driving force behind growth," Goolsbee said. "And as for inflation, there is evidence that we are getting past this sharp surge in prices."

Goolsbee's remarks had a positive impact on U.S. dollar quotes.

As for the current technical picture of EUR/USD, buyers now need to focus on taking the 1.1650 level. Only this would allow them to target a test of 1.1680. From there, it would be possible to climb to 1.1710, but doing so without support from major players would be quite difficult. The most distant target would be the 1.1740 high. In the event of a decline in the trading instrument, I expect any serious action from major buyers only around the 1.1630 area. If there is no one there, it would be advisable to wait for a retest of the 1.1610 low or to open long positions from 1.1591.

As for the current technical picture of GBP/USD, pound buyers need to take the nearest resistance at 1.3440. Only this would allow them to target 1.3460, above which a breakout would be quite difficult. The most distant target would be the 1.3490 level. In the event of a decline, bears will attempt to take control of 1.3415. If they succeed, a break of this range would deal a serious blow to bullish positions and push GBP/USD toward the 1.3390 low, with the prospect of a move to 1.3370.