EUR USD breaks to near 1.1575 on Monday, the highest level seen in three-and-a-half years.

The Euro (EUR) has demonstrated remarkable strength against the US Dollar (USD), reaching a level of 1.1575, the highest recorded in approximately three-and-a-half years. This upward movement in the EUR/USD exchange rate is a direct response to the diminishing confidence in the USD, which has faced growing skepticism regarding its status as a safe-haven currency. The US Dollar Index (DXY), reflecting the USD’s value against six major currencies, has also registered a three-year low near 98.00. Recent political remarks made by US President Donald Trump regarding the potential dismissal of Federal Reserve (Fed) Chair Jerome Powell have further destabilized confidence in the USD. Trump's assertion that Powell has not appropriately lowered interest rates, despite conducive economic conditions characterized by lower oil and grocery prices, highlights a growing concern over the Fed's independence. Trump's comments, stating "If I want him out of there, he’ll be out real fast, believe me," sent ripples through the markets, emphasizing the fragility of the dollar's credibility. Following advice from economic advisor Kevin Hassett, it became apparent that the Trump administration may be seeking avenues to dismiss Powell, intensifying fears regarding potential political interference in monetary policy. Statements from Chicago Fed President Austan Goolsbee reaffirmed that economists agree on the necessity for central banks to retain independence in conducting monetary policy, asserting that political tampering could undermine economic outcomes. The continued rise of EUR/USD has been fueled by a solid breakout above previous resistant levels, reflecting a persistent bullish trend. Technical analysis indicates that the pair is now facing significant resistance at the 1.1600 mark, with key support identified at 1.1276. Meanwhile, gold prices are soaring, also approaching new highs, driven by fears surrounding the US-Chinese trade situation and the overall uncertainty regarding the Fed's autonomy. The reverberations from Trump's tariffs and uncertainties about US economic strategies are contributing to a toxic mix affecting trader sentiment across multiple asset classes, including cryptocurrencies like Bitcoin and Ethereum, which managed to extend last week's recovery. Market analysts stress that ongoing developments in US economic data and new trade announcements will significantly impact future movements in both the EUR/USD pair and the overall forex market landscape. In conclusion, the current trading climate showcases both the potential volatility of foreign exchange markets amidst political turbulence and the necessity for careful scrutiny of upcoming economic indicators as traders position themselves for what lies ahead.