Many economists believe that the U.S. dollar and other American assets remain vulnerable and could face renewed selloffs following Donald Trump's actions last Friday, which cast doubt on the credibility of U.S. institutions.

After the resignation of Adriana Kugler last Friday and the dismissal of a senior official at the Bureau of Labor Statistics, President Donald Trump now has the opportunity to appoint a suitable replacement—creating a situation that could undermine the authority of Fed Chair Jerome Powell.

Such actions may erode investor confidence in the stability of the U.S. economy and political system. Trust in institutions such as the Federal Reserve, the Treasury Department, and the judiciary is a cornerstone of the U.S.'s appeal to international capital. Any doubts about their independence and effectiveness could trigger capital outflows and weaken the dollar. In the short term, this may lead to increased volatility in financial markets, a rise in Treasury yields, and capital flight from U.S. assets. Investors, wary of political instability and unpredictability, may shift to safer havens such as gold or currencies of other developed economies. Over the longer term, the consequences could be even more serious. Undermining institutional trust could negatively affect the investment climate, slow economic growth, and weaken the dollar's role as a global reserve currency. Restoring confidence, once lost, would require significant time and effort.

"Unfortunately, we are witnessing renewed and serious attempts to concentrate more power in the hands of the White House," said SEB AB. "This justifies increased risk premiums when investing in various U.S. assets." Concerns about the politicization of U.S. institutions are also rising amid signs of economic slowdown. Although the dollar showed some signs of recovery early last week, it fell sharply against all currencies on Friday following weaker-than-expected U.S. employment data.

The jobs report prompted traders to raise their bets on monetary policy easing by the Federal Reserve, as money market pricing now suggests that a rate cut next month is more likely than not. This sentiment intensified after Kugler's resignation—she had voted last week to keep rates unchanged.

While investors were already expecting Trump to appoint a more "dovish" Fed Chair next year after Powell's term ends, Kugler's departure may accelerate that timeline.

In any case, the appointment of new regional Fed officials represents a market risk—particularly during August when lower liquidity is common due to investor vacations. On Sunday, Trump stated that he plans to announce successors for Kugler and McEntarfer in the coming days.

As for the current technical outlook for EUR/USD, buyers need to focus on reclaiming the 1.1600 level. Only then will a move toward testing 1.1640 become realistic. From there, a push toward 1.1665 may follow, though doing so without support from large players will likely prove difficult. The most ambitious target is the 1.1690 high. If the instrument declines, only near 1.1555 would I expect significant activity from major buyers. If there's no support there, it would be reasonable to wait for a retest of the 1.1518 low or consider long positions from 1.1479.

As for GBP/USD, pound buyers need to break through the nearest resistance at 1.3305. Only this will open the way toward 1.3340, a level that will be difficult to surpass. The furthest upward target is the 1.3380 level. If the pair declines, bears will likely attempt to regain control around 1.3255. A successful breakout below this range would deal a serious blow to bullish positions and push GBP/USD down to the 1.3217 low, with the potential to reach 1.3180.