As of January 13, 2026, the US dollar weakened broadly after Federal Reserve Chair Jerome Powell disclosed a Department of Justice (DOJ) criminal investigation into his congressional testimony on Fed headquarters renovations. Powell described the probe as a “pretext” by the Trump administration to pressure the central bank into faster interest-rate cuts. This escalation in the Trump–Powell feud has intensified concerns over Federal Reserve independence, triggering a sharp drop in dollar futures, a rally in Treasuries, and a flight to safe-haven assets like gold.
This live guide explains the latest developments, market reaction, technical outlook, and what investors & crypto traders should watch next on Tapbit.
Powell Under Pressure: Political Probes and Policy Risks
On January 11, 2026, Powell released a rare video statement confirming the Fed received grand jury subpoenas on January 9 related to his June 2025 Senate testimony defending the $2.5 billion Fed headquarters renovation project. He explicitly linked the investigation to ongoing political pressure from President Trump, who has repeatedly demanded aggressive rate cuts since taking office in January 2025.
Powell’s key statements:
- “This unprecedented action should be seen in the context of the administration’s threats and ongoing pressure.”
- “No one is above the law, but the Fed must set policy based on evidence and the public interest—not political preferences.”
- “Threats to our independence undermine confidence in U.S. monetary policy.”
Trump responded by denying direct involvement, stating the probe is unrelated to rates but criticizing Powell’s management of both policy and renovations.
Market Reaction: Stocks Drop, Dollar Slides, Treasuries Rally
Markets responded immediately to the independence concerns:
- US Dollar Index (DXY): Fell ~0.4–0.6% against major currencies
- Stock futures: S&P 500 futures -0.5% to -0.8%, Nasdaq futures -0.8%
- Treasury yields: 10-year yield dropped to ~4.32% (flight to safety)
- Gold: Surged above $4,600/oz as a safe-haven play
- Crypto: Bitcoin held near $88,900 but altcoins weakened
Analysts attribute the move to fears that political interference could erode confidence in the Fed’s ability to act independently, potentially weakening the dollar’s reserve currency status.
USD Technical Outlook & Key Levels to Watch
| Pair / Index | Current Level | Support | Resistance | Short-Term Bias |
|---|---|---|---|---|
| DXY (US Dollar Index) | ~108.20 | 107.80–108.00 | 108.80–109.20 | Bearish below 108.50 |
| EUR/USD | ~1.0950 | 1.0900 | 1.1000 | Bullish |
| USD/JPY | ~158.40 | 157.50 | 159.50 | Downside risk |
| Gold (XAU/USD) | ~$4,620 | $4,550 | $4,700 | Bullish breakout |
Short-term bias: Bearish on USD until political clarity emerges. Break below 107.80 could accelerate the slide.
Broader Implications for Investors & Crypto Markets
Short-term risks:
- Further dollar weakness if independence fears persist
- Equity rotation toward defensive sectors
- Accelerated safe-haven flows (gold, Treasuries, stablecoins)
Crypto angle:
- USD weakness usually supports crypto prices
- But political uncertainty can increase overall risk-off sentiment
- Bitcoin & Ethereum may consolidate; high-beta alts (SOL, XRP) more vulnerable
Pros & Cons of the Current Market Environment
| Pros | Cons |
|---|---|
| Safe-haven opportunities (gold, Treasuries) | Increased macro uncertainty |
| Potential for faster rate cuts | Risk of prolonged political pressure |
| USD weakness can benefit crypto | Equity volatility risk |
| Clear trading levels emerging | Whipsaw moves during news flow |
How to Trade This Volatility on Tapbit
- Sign up on Tapbit → Create Account
- Deposit USDT or BTC
- Use low-fee spot or up to 125x futures
- Trade USD pairs (DXY, EUR/USD), gold, or BTC during news releases
- Set alerts for Fed-related headlines
Tapbit offers fast execution and deep liquidity — ideal for macro-driven volatility.
FAQs – Trump-Powell Feud & DOJ Subpoenas 2026
Why is the dollar falling?
Fears of eroded Fed independence and potential political interference in rate decisions.
How serious is the DOJ probe?
Powell calls it unprecedented; seen as pressure tactic rather than substantive.
Will this affect Fed rate cuts?
Short-term noise likely; long-term policy independence is the bigger concern.
Best trade setup?
USD weakness → long gold, BTC; short USD/JPY if momentum continues.
Conclusion
The Trump–Powell feud and DOJ subpoenas have escalated concerns over Federal Reserve independence, triggering immediate dollar weakness, equity dips, and safe-haven buying in early 2026. While short-term volatility is likely, the broader market impact depends on how political pressure evolves.
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Disclaimer: Not financial advice. Markets are highly volatile. Always do your own research. Data as of January 13, 2026.
