Donald Trump has decided to remove Federal Reserve Chair Lisa Cook from office following allegations of mortgage document forgery, marking a sharp escalation in the president's battle to tighten control over the U.S. central bank. This move led to a stronger U.S. dollar and a notable sell-off in the stock market.

The decision sparked outrage in financial and political circles. Many economists and analysts expressed serious concerns about the independence of the Federal Reserve, stressing that political interference could undermine confidence in the U.S. economy and destabilize financial markets. Trump supporters, however, welcomed the move, arguing that Cook was biased and that her policies did not serve the interests of American citizens. They insisted that the president had the right to appoint individuals who share his economic vision in order to ensure implementation of his policies.

The forgery allegations added further complexity. If proven true, they could have serious legal consequences for Cook and further damage her reputation. Critics of Trump, however, argue that the charges were fabricated to discredit her and justify her removal.

After announcing his decision, Trump stated that he had sufficient grounds to dismiss Cook — the first Black woman to serve on the Fed Board of Governors in Washington — citing allegations that she had provided false information regarding one or more mortgage loans.

Cook immediately responded that Trump had no authority to fire her and that she would not resign. Her lawyer, Abbe Lowell, stated that they plan to take all necessary steps to block Trump's "illegal actions." Cook said: "President Trump claims to have fired me, though under the law he has no grounds and no authority to do so. I will not resign. I will continue to perform my duties to support the U.S. economy, as I have done since 2022."

Cook, appointed by President Joe Biden in 2022, was serving a term set to expire only in 2038. Her removal would give Trump a four-member majority on the seven-seat Fed Board of Governors. The Fed declined to comment.

"The American people must have complete confidence in the integrity of those entrusted with setting policy and overseeing the Federal Reserve," Trump wrote in a letter sent to Cook on Monday. "In light of your dishonest and potentially criminal conduct in a financial matter, they cannot, and I am not confident in your integrity."

According to Cook's lawyer, she may immediately petition for a court injunction to reinstate her while the case proceeds. No formal charges have been filed, although a Justice Department official said last week that an investigation could be launched.

As noted above, financial markets reacted negatively to the news. The U.S. dollar index, two-year Treasury yields, and S&P 500 futures fell after the announcement, while the yield on ten-year Treasuries rose slightly.

Technical Picture for EUR/USD At present, buyers need to take control of 1.1660. Only this will allow them to target a test of 1.1690. From there, a move toward 1.1740 is possible, but achieving it without support from major players will be difficult. The ultimate upward target is the 1.1780 high. In case of a decline, I expect significant buying activity to emerge near 1.1600. If no large buyers appear, it would be preferable to wait for a retest of the 1.1565 low or to consider long positions from 1.1530.

Technical Picture for GBP/USD Pound buyers need to take out the nearest resistance at 1.3490. Only this will allow them to target 1.3523, above which a breakout will be difficult. The ultimate upward target is the 1.3560 level. In the event of a decline, bears will attempt to gain control at 1.3440. If successful, a breakout of this range would seriously damage bullish positions and push GBP/USD down to the 1.3420 low, with the prospect of extending the move toward 1.3390.