The dollar index fell by -0.27% on Monday due to threats to Fed independence following Powell’s comments on criminal charges from the Justice Department. Markets are predicting a -25 bp rate cut at the next FOMC meeting. The dollar’s underlying weakness is expected to continue in 2026, with the possibility of a -50 bp rate cut.

EUR/USD rose by +0.29% on Monday due to threats to the Fed’s independence and a positive Eurozone Jan Sentix investor confidence index report. Swaps are only pricing in a 1% chance of a +25 bp rate hike by the ECB at the next policy meeting.

USD/JPY rose by +0.15% on Monday, with the yen falling to a 1-year low against the dollar. Concerns over Japan’s fiscal policy and China-Japan tensions are putting pressure on the yen.

Gold and silver prices rallied sharply on Monday, with both posting contract highs. Precious metals demand surged due to concerns over the Fed’s independence and President Trump’s bond-buying move. Increased liquidity and geopolitical risks are supporting precious metals prices.

Central bank demand for gold remains strong, with China’s PBOC and global central banks boosting their gold reserves. Fund demand for precious metals is also high, with long holdings in gold and silver ETFs reaching multi-year highs.

Read more at Yahoo Finance: Dollar Falls and Precious Metals Surge on Concerns Over Fed Independence