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17.06.202612:16 Forex Analysis & Reviews: Kevin Warsh holds his first meeting as Fed chair

Today, the Federal Reserve holds its first meeting under Chair Kevin Warsh—arguably the most anticipated event of the week, even though the policy decision itself is not in doubt. The rate is expected to remain unchanged in the 3.5–3.75% range. The intrigue is not the decision but what follows: the wording of the statement and the new chair's first press conference.

The central question is whether the Fed will remove language that hints that cuts are the next step. Several FOMC members have long wanted to do so: the recent inflation picture leaves no ground for such signals. Recall that May CPI rose to 4.2% year-on-year—the highest since early 2023; core PCE reached 3.8%; and the US labor market added 172,000 jobs in May against a forecast of 85,000. Given these data, retaining a hint of easing in the statement would risk losing market credibility.

Quarterly projections and an updated dot plot will also be released. Economists expect a marked upward revision to inflation forecasts and a shift in the timing of rate cuts from 2026 to 2027. Committee members earlier priced one cut in 2026 and one in 2027. That scenario now looks outdated. The probability of a rate increase by December already exceeds 80% in the Fed funds futures.

The dot plot itself is a further point of interest: Warsh has publicly criticized the practice of "forecasting the future path," and the market will watch closely to see whether the new chair participated in producing the projections or distanced himself from the process.

Warsh faces a difficult position even before his first meeting. Before his appointment he shared President Trump's rhetoric in favor of rate cuts. The current inflation reality makes cuts impossible, and Warsh must choose between following the data or yielding to political pressure. Trump has repeatedly demanded lower rates, and critics warn of a risk to the Fed's independence.

At the same time a significant contextual factor has emerged in recent days. The signing of a peace memorandum between the United States and Iran, scheduled for Friday, and Brent's fall below $83 create unexpected room for maneuver for Warsh. If oil prices continue to decline, energy-driven inflationary pressure will subside faster than forecast—and a tough message at today's press conference could prove excessive. Journalists will therefore press Warsh on how the Iran agreement changes the inflation outlook; his answer to that question may be the most important remark of the day.

A technical outlook for EUR/USD suggests that buyers should consider taking 1.1620. That would allow a test of 1.1645. From there, the pair could reach 1.1665, although advancing beyond that level without support from major participants will be difficult. On the downside, only significant buying interest near 1.1590 is likely to prompt large players to act. Absent that support, it would be prudent to wait for a new low at 1.1565 or to consider long entries from 1.1535.

As for GBP/USD, buyers of the pound sterling need to clear resistance at 1.3415 to target 1.3440. Moving above that level may prove difficult, with a further target at 1.3460. If the pair falls, bears will seek to seize control at 1.3385. A decisive break below 1.3385 would likely inflict serious damage on long positions and could push GBP/USD toward 1.3360, with downside extending to 1.3330.

*Phân tích thị trường được đăng tải ở đây có nghĩa là để gia tăng nhận thức của bạn, nhưng không đưa ra các chỉ dẫn để thực hiện một giao dịch.

Jakub Novak,
Analytical expert of InstaSpot
© 2007-2026

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