Fed “Under Siege”: Criminal Probe Rattles Dollar Ahead of CPI

Ultima Markets Daily Market Insights – January 13, 2026

The financial world woke up to a shockwave yesterday that had nothing to do with economics and everything to do with politics. The unprecedented DOJ criminal investigation into Fed Chair Jerome Powell has shattered the illusion of “Central Bank Independence,” creating a massive cloud of uncertainty just hours before the critical CPI inflation report.

Markets are now watching not just economic data, but a potential full-blown constitutional crisis at the Federal Reserve.

The Fed Investigation: A “Political” Attack on the Dollar

Yesterday, news broke that the Department of Justice (DOJ) has launched a criminal probe into Chair Powell, ostensibly over “mismanagement” of Fed renovation costs. However, markets see through the veil: this is widely interpreted as a political escalation by the White House to pressure the Fed into cutting rates faster.

The US Dollar Index has retreated from the 99.00 resistance, slipping back toward 98.50.

Why? Because “Fed Independence” is the bedrock of the Dollar’s global trust. If investors believe US monetary policy is now being dictated by the White House rather than data, the “Political Risk Premium” rises, weighing heavily on the Greenback.

CPI Tonight: The Key Pivot?

Tonight’s US CPI Report (8:30 AM US ET) lands in the middle of this firestorm. The consensus expects both headline and core inflation to hold steady at 2.7%.

Normally, a “Hot” CPI would boost the Dollar because it forces the Fed to hike (or hold longer). But today, a hot print is the worst possible outcome. Why? If inflation spikes, Powell must sound hawkish to do his job. But with a DOJ probe hanging over his head for “not cutting rates,” a hawkish stance could trigger a direct confrontation with the Trump Administration.

A potential market reaction:

• Hot CPI (>2.8%): Expect a volatility explosion. The Dollar might spike initially but fail to hold gains as political fears take over. Gold would likely rocket higher as a hedge against institutional chaos and policy uncertainty.
• Cool CPI (<2.6%): This would be the “savior” print. It allows Powell to cut rates justifiably, defusing the political tension and likely stabilizing or modestly weakening the Dollar while boosting Stocks.

Dollar Index (USDX), H4 Chart | Ultima Market MT5

Technically, the US Dollar faces resistance near 99.00, while yesterday it rebounded from 98.40, suggesting this range (99.00 – 98.40) holds the area for the next Dollar move. Unless the CPI prints a surprised beat or miss, the impact on the Dollar may be only short-term.

But either way, the upside for the Dollar may be limited below 99.00, unless it clears above it decisively. Hence, the post-CPI move for the Dollar is more likely to be a limited one.

See also our GBPUSD Technical Analysis.

Bitcoin: The “Perfect Storm” (Probe + Clarity Act)

While the Dollar struggles with the Fed’s credibility crisis, Bitcoin is emerging as the primary beneficiary of the chaos.

Bitcoin was built for exactly this scenario. When the Central Bank is under political attack and its independence is questioned, trust shifts from “Centralized Institutions” (The Fed) to “Decentralized Code” (Bitcoin). The DOJ probe could act as a massive “advertisement” for crypto’s non-political nature.

Adding fuel to the fire, the Digital Asset Market Clarity Act is nearing its critical Senate markup this Thursday (Jan 15). Bitcoin and cryptocurrencies are likely to see increased volatility after that. So today could be a precursor for Bitcoin.

BTCUSD, H4 Chart | Ultima Markets MT5

From a technical outlook, Bitcoin has been holding firm above 90,000 recently, setting a floor for the price. If this level continues to hold, it suggests buyers are supporting the market. A clear breakout above 94,000 could set a bullish reversal for Bitcoin.

What to Focus on Today?

Traders must navigate a minefield of hard data and political headlines today.

• The primary focus is the US CPI Release, which will determine if the Fed is fighting an economic battle on top of a political one.
• Immediately following the data, watch for Fed & White House Headlines—any resignation rumors regarding Powell or aggressive comments from the Administration could trigger volatility in the Dollar.
• Finally, keep an eye on Bitcoin’s reaction to the $90,000 mark and the 94,000 resistance; a break here would signal that the market is potentially staging a BTC reversal.

Disclaimer

Comments, news, research, analysis, price, and all information contained in the article only serve as general information for readers and do not suggest any advice. Ultima Markets has taken reasonable measures to provide up-to-date information, but cannot guarantee accuracy, and may modify without notice. Ultima Markets will not be responsible for any loss incurred due to the application of the information provided.