EUR/USD trims gains below 1.1650 as Fed Governor Cook defies Trump

EUR/USD holds gains after registering more than three-quarters of a percent in the previous session, trading around 1.1630 during the Asian hours on Tuesday. The pair holds ground as the US Dollar (USD) faces challenges amid concerns over Federal Reserve (Fed) independence after the US President Donald Trump threatened to remove Fed Governor Lisa Cook.

President Trump posted a letter on social media early Tuesday, saying that he was removing Fed Governor Cook from her position on the Fed's board of directors. However, Cook said that she will not resign as there is no cause exists for her to be fired. I will continue to carry out duties, she added.

President Trump also warned that he may impose a 200% tariff on Chinese goods if China refuses to supply magnets to the United States (US), per Reuters. Moreover, a Bloomberg report says that Trump threatened "subsequent additional tariffs" and export restrictions on advanced technology and semiconductors in retaliation for digital services taxes that hit American technology companies.

Additionally, the EUR/USD pair appreciates as the Euro (EUR) receives support as the European Central Bank (ECB) signaled a pause in monetary easing amid strengthening Eurozone labor market strength. Meanwhile, details of the EU-US deal indicated that most European goods will face 15% tariffs, while autos, pharmaceuticals, and semiconductors may be exempt from harsher US duties.