ING Notes European Currencies That May Benefit as A Hedge to Federal Reserve's Independence

06:25 AM EST, 01/12/2026 (MT Newswires) -- Federal Reserve Chair Jerome Powell late Sunday said the Fed had been handed grand jury subpoenas from the United States Justice Department, threatening a criminal indictment over his testimony about renovation works at the central bank's headquarters, said ING.

Powell has explicitly characterised this as an attack on the Fed's independence from the Trump administration, wrote the bank in a note.

The Swiss franc (CHF) is the best-performing G10 currency early Monday, confirming its role as a preferred hedge against Fed independence risk, stated ING. However, based on 2025 moves, the euro (EUR) and Swedish krona (SEK) could also be major beneficiaries.

It's clear markets are in wait-and-see mode, expecting to learn more about the effective implications of these Fed subpoenas, pointed out the bank.

On the downside, the U.S. threat of forcefully annexing Greenland remains the big frontier risk for European currencies, added ING. While possible currency intervention by Denmark's central bank may be having a knock-on effect on liquidity, the latest unusual moves in Danish krone (DKK) forwards suggest some hedging/speculation may be underway.

There will instead be little to no domestic data input for the euro this week. And while there are some scheduled European Central Bank speakers, ING has heard very limited dissent of late, and markets will remain reluctant to change their ECB pricing.

The bank still thinks EUR/USD can eye 1.1600 in the near term if Fed risk is priced out. But markets may require quite a bit of reassurance first, and ING has a rather bullish bias to 1.170-1.1750 for Monday.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.