Dollar Falls and Precious Metals Surge on Concerns Over Fed Independence

Group 1 - The dollar index (DXY00) fell by -0.27% due to threats to the Federal Reserve's independence following comments from Fed Chair Powell regarding potential criminal charges from the Justice Department [1][2] - The markets are currently pricing in a 5% chance of a -25 basis point rate cut at the upcoming FOMC meeting on January 27-28 [2] - The Federal Reserve is expected to cut interest rates by approximately -50 basis points in 2026, contrasting with the Bank of Japan's expected +25 basis point increase and the European Central Bank's anticipated unchanged rates [3] Group 2 - The dollar is under pressure as the Fed increases liquidity by purchasing $40 billion a month in T-bills, which began in mid-December [4] - Concerns regarding President Trump's potential appointment of a dovish Fed Chair are contributing to bearish sentiment for the dollar, with Kevin Hassett being viewed as the most dovish candidate [4] - The euro (EUR/USD) rose by +0.29% as threats to the Fed's independence weakened the dollar, while the Eurozone's January Sentix investor confidence index increased to a 6-month high of -1.8, surpassing expectations [5]