EUR/USD Forecast: Kevin Warsh debut as Fed Chair and war drums to keep volatility high - FXStreet

A changing Federal Reserve

The desk anticipates a cautious Federal Reserve under Kevin Warsh's potential leadership, emphasizing a hold on interest rates amidst persistent inflation concerns. Per the full note [source], Warsh's recent testimony suggests a reluctance to commit to rate cuts, aligning with the Fed's current stance of maintaining rates steady. This perspective is reinforced by the labor market's resilience and inflation metrics that remain above target. Given the lack of high-impact events in the coming month, traders should prepare for potential volatility as the Fed navigates these complexities.

EUR/USD: War-driven forecasts and softer Dollar outlook – Commerzbank - FXStreet

Kevin Warsh navigates a hawkish Fed shift

The desk posits that the changing tone from the Federal Reserve, now led by Kevin Warsh, signals a potential shift toward future rate hikes amidst growing economic momentum and inflationary pressures. As outlined in the source commentary, the Fed Chair seems disinclined to provide explicit forward guidance, which creates uncertainty in market pricing for rate adjustments. The consensus for rate hikes has intensified, with a 25bp increase already priced in for this year, as inflation rates are reported at a three-year high of 4.2%. Per the full note [source], this evolving landscape offers a complex, albeit hawkish, backdrop for major currency pairs like EUR/USD and USD/JPY going into the latter half of the year.

Euro to Dollar Forecast: Fed Credibility Tested as EUR/USD Volatility Surges - CurrencyNews.co.uk