Exactly 281 days from now—on May 15, 2026—Jerome Powell's term as Fed Chair will expire. With just over nine months left until "D-Day," the White House is already preparing for the transition.
Donald Trump tried to remove Powell during his first presidency (despite having appointed him), but couldn't find legal grounds for doing so. Ironically, Powell was reappointed during Trump's absence from the Oval Office, under Joe Biden's administration. So, upon returning to the White House, the Republican president once again faced the same problem—and again failed to solve it. This time, however, Trump's team resorted to harsher pressure tactics—ranging from public calls for Powell's resignation to accusations of mismanagement and wasting taxpayers' money (namely, the scandal over the costly renovation of the Fed's headquarters).
Powell withstood all the attacks, stating that he would only step down early "if he dies." Moreover, the U.S. Supreme Court backed him, ruling that the Fed Chair cannot be dismissed due to political disagreements.
In other words, Trump can only wait for Powell's term to expire. However, he can still influence the Fed's policy much earlier—albeit through other means. Previously, American media (notably The Wall Street Journal) speculated that the U.S. president would weaken Powell's position by announcing the next Fed Chair ahead of time. Now that strategy seems to have evolved. According to analysts at Wolfe Research, the President plans to use a vacant seat on the Fed's Board to appoint Powell's successor.
Last Friday, it was announced that Fed Governor Adriana Kugler will step down early on August 8—several months before her term ends. According to the Fed's official press release, she resigned to return to teaching at Georgetown University this fall. Although there was speculation that Kugler made a political move to clear the way for Trump's protege, she's not someone typically associated with sympathies for Trump or the Republican Party. First, she was appointed by Joe Biden and had previously worked at the Department of Labor under Barack Obama. Second, she has promoted views that often run counter to Republican and especially Trump-aligned positions—such as advocating cautious monetary policy.
Regardless, Kugler's resignation benefits Trump. As early as this Friday—or in the coming days—the President is expected to nominate someone to fill her vacant seat on the Fed Board. After that, the Senate will vote to confirm or reject the nominee. Given that Republicans control both chambers of Congress, there's little doubt that "Trump's person" will be confirmed.
Many analysts believe that Trump will simultaneously announce this newly appointed Fed Governor as Powell's intended successor.
The idea here is to install an informal "shadow chair" within the Fed—someone who would gradually undermine Powell's authority, reducing him to a lame duck. This development would undoubtedly weigh on the U.S. dollar, as markets would begin responding to the rhetoric of the "chair-in-waiting."
Furthermore, some Fed officials might start aligning with Trump's protege. Recall the July Fed meeting, where two Governors—Christopher Waller and Michelle Bowman—broke ranks and voted in favor of a rate cut. This was the first such instance since December 1993.
Now, the key question is: Who will replace Adriana Kugler? According to Trump, Treasury Secretary Scott Bessent (once considered a top candidate) has expressed his intention to stay in his current role. As a result, the list of potential candidates has reportedly narrowed to four individuals. According to Trump, this list includes "two Kevins" and "two good guys" (whose names he didn't reveal).
The "Kevins" are National Economic Council Director Kevin Hassett and former Fed Governor Kevin Warsh. As for the "two good guys," their identities remain unknown, though rumors suggest one of them could be current Fed Governor Christopher Waller, a vocal advocate for rate cuts.
Leading U.S. media outlets (WSJ, FT, Reuters, Bloomberg) report that Trump may ultimately choose Kevin Hassett, who has two key advantages: loyalty to Trump and alignment with his views.
At this point, it's safe to assume that any announced candidate will meet these criteria—this time, Trump is unlikely to "make a mistake" as he did with Powell.
Therefore, the main intrigue lies not in who will replace Kugler, but whether Trump will publicly name that person as Powell's successor.
This question may be answered in the coming days—possibly as soon as Friday, August 8. Given this factor, entering EUR/USD short positions is not recommended right now, despite the pair's relatively strong corrective pullback. Kugler's replacement is not a technical matter, but rather a political one—one that could trigger significant volatility in the currency market, most likely not in favor of the greenback.
