The unpredictable Donald trump sometimes surprises with his predictability. The US President is expected to criticize the large-scale strengthening of the dollar, expressing dissatisfaction with the actions of the Federal Reserve.

Such a move was really expected, especially against the background of his rhetoric about the Fed after the rate hike in June. However, now Trump has somewhat toughened his criticism and has already switched to personalities. If a month and a half ago, the US President voiced dissatisfaction with the actions of the regulator in principle, on Monday he unleashed anger directly on Jerome Powell. According to the American press, at a meeting with major businessmen, Trump said that he expected "cheap money", whereas Powell's de facto carries out the opposite policy. Although this phrase was said at a non-public meeting, the president's words were confirmed by several participants. Moreover, in an interview with one of the US news agencies, Trump said that he was not "delighted" either with tightening monetary policy conditions or with the head of the Federal Reserve.

So, Trump's position is obvious and unlikely to change. In turn, Jerome Powell also probably will not dramatically change the course of normalization of monetary policy in favor of the president, while maintaining the principle of independence of the Fed. At least, the head of the regulator ignored the criticism of Trump, and during his several speeches in July-August, he did not comment on these attacks. Moreover, the tone of his rhetoric has not changed, as has the likelihood of a double rate hike this year. Hence the question: what scenario can develop a conflict between the head of state and the head of the Fed? And what levers of influence do the warring parties have?

Contrary to popular belief about the full "integrity" of the regulator's members, the president has the authority to dismiss any Fed governor, although this rule has not yet been applied in practice. The relevant law literally reads as follows: "...each member shall hold office for a term of fourteen years from the expiration of the term of his predecessor, unless sooner removed for cause by the President" (each member of the regulator holds office for a period of fourteen years from the date of expiry of the term of office of his predecessor, if he is not dismissed by the President for anything before that).

In other words, Donald Trump formally has the most effective leverage. I do not presume to judge whether he will be the first US President to initiate the dismissal of the head of the Fed – in the context of the market reaction, this is not so important in fact. If Donald Trump in his usual manner at least mentions this possibility, the dollar will be under the strongest pressure. Such verbal intervention will have a powerful impact on the market, and in the long term.

In general, history knows more than one case of "confrontation" between the head of state and the Fed. In particular, Ronald Reagan was dissatisfied with the level of interest rate (which at that time was at the level of 11.25% -10%, containing inflation growth), and tried to convince the head of the Federal Reserve Paul Volcker to soften monetary policy. According to the legendary Alan Greenspan, Reagan was dissuaded from putting pressure on the Fed in the public sphere, although, as Greenspan himself admits in his book, "the president's speech with public criticism of the Fed's actions would force Volcker to make concessions."

Projecting these events 30 years ago on the events of today, you come to the conclusion that the current head of the United States is unlikely to listen to the advice of his aides and associates: his public criticism of the Fed's actions will get tougher as the interest rate increases. The only question is when exactly Trump uses the "verbal trump card" in the form of threats of resignation. Obviously, this will be a last resort for him, given the background of this issue and the possible resonance. However, this scenario cannot be ruled out due to the lack of other levers of influence on the Fed.

In the context of recent events, special attention should be paid to the speech of the head of the Federal Reserve at the economic symposium in Jackson Hole. If his rhetoric does not change (which is likely) and will be "hawkish" in nature, it will mean that Trump and Powell are at the beginning of their confrontation, and subsequent statements by the US President will only get tougher.

The greenback reacted to the latest events with a decline throughout the market: the dollar index fell to 95.46 points. Paired with the euro, the dollar broke through the nearest resistance level of 1.1450 (Tenkan-sen line on the daily chart) and is now testing a stronger resistance level of 1.1540 (the average line of the Bollinger Bands indicator, which coincides with the Kijun-sen line on D1). If the pair is secured above this level, the path will be opened up to 1.1690 - this is the lower boundary of the Kumo cloud on the daily chart.