USD rebounds as Fed's Cook dismisses removal attempts, political tensions rise

The US dollar index recovered 0.2% to 101.50 after Fed Governor Lisa Cook publicly rejected removal attempts, asserting the independence of Federal Reserve governors. Markets initially sold dollars on concerns about potential Fed instability, pushing USD/JPY down to 149.20 before recovering to 149.85. Cook's firm stance reassured investors about Fed continuity, with traders pricing in reduced political interference risk. The dollar's recovery accelerated as European currencies weakened, with EUR/USD falling back to 1.0845 from intraday highs of 1.0875. Technical indicators show the dollar index defending crucial support at 101.20, with momentum indicators turning positive. The political tensions highlight ongoing concerns about central bank independence, though immediate market impact remains contained. Traders are monitoring developments closely, with any escalation potentially triggering renewed volatility in dollar pairs.