EUR/USD: The FED's independence suffers a new hit

The USD slipped a few pips against the euro amid renewed volatility, following yet another attack by Trump on the Fed's independence. The White House took another step toward legal action against Powell, based on last summer's hearings regarding the renovation of a Federal Reserve building.

A new key step has just been taken in the legal proceedings against the Fed chairman, ironically following the release of a private-sector employment report on Friday, a report that caused a collapse in the likelihood of a federal interest rate cut at the next FOMC meeting on 28 January.

This report presents a paradoxical picture, since at the same time, job creation in the private sector is weak, even weaker than the consensus forecast of 50,000, and the unemployment rate has fallen more sharply than expected, to 4.4% of the labour force. The good news comes from the stabilisation of wage growth at +0.3% month-on-month.

"The data from the coming months will provide a definitive answer. However, while it was unthinkable in recent decades, the scenario of resilient US growth despite a stagnant job market now seems plausible," comments Enguerrand Artaz, Strategist, La Financiere de l'Echiquier (LFDE).

Geopolitics is inevitably impacting the foreign exchange market at the start of 2026, with the imperialist ambitions of Trump's United States on the American continent. No sooner had Venezuelan dictator Nicolas Maduro been captured than the White House chief reaffirmed his territorial ambitions over Greenland, declaring on his social network, Truth, that if the island didn't fall into his hands, Russia or China would annex it...

"The American administration seems to be embracing the vision championed by Russia and China for the past 14 years: civilisational zones each dominated by an imperial state. This wouldn't be the first time this has happened. Let's remember the agreement between the Portuguese and the Spanish, signed under the auspices of Pope Alexander VI in 1493, to divide the world between them. In this case, the Western Hemisphere would fall to Washington, which obviously includes Greenland. Conveniently, the territory is rich in zinc, copper... and especially uranium. The Kvanefjeld site alone, in the south, holds the world's sixth-largest uranium reserves. This is..." Essential for providing low-cost energy to ensure American technological hegemony in AI. Trump understood this well. On his inauguration day, he even added uranium to the list of strategic metals," explains Christopher Dembik, investment strategist at Pictet AM.

The Iranian situation appears far more complex, as demonstrations are being repressed with live ammunition. The White House chief's attitude is more reserved, claiming that Tehran is ready to "negotiate," and that meetings with Iranian emissaries are being planned.

On the economic front, the Sentix index, at -5, is only rising very slightly, remaining in negative territory. The index from the eponymous institute measures investor confidence in the Eurozone.

Right now, the EUR/USD is trading at $1.1688.

KEY TECHNICAL ELEMENTS
While the short-term bias remains confirmed by the relative position of the 20-day and 50-day moving averages after their crossover, the buying entry point is not optimal at this stage.

A new major technical test is looming: that of the 200-day moving average (in brown).

MEDIUM-TERM FORECAST
Based on the key technical factors mentioned above, our medium-term outlook for the EUR/USD pair is neutral.

We will maintain this neutral outlook as long as the EUR/USD exchange rate remains between the support level at $1.1608 and the resistance level at $1.1771.