Key points:

• Dollar stronger after FOMC
• Euro briefly dips below $1.15
• Interest rates may go higher soon

Here’s what’s changing for the Fed under Kevin Warsh, the new chair.

🦅New Sheriff, Stronger Dollar

• The euro took a hit after the Federal Reserve’s first meeting under new Chair Kevin Warsh. The EURUSD briefly slipped below $1.15 before recovering some ground to trade near $1.1520 early Thursday. The move wasn’t about rates — it was about what comes next.
• As expected, the Fed left interest rates unchanged at 3.5%-3.75%. But markets quickly focused on the broader message coming out of Washington: the era of predictable central-bank signaling may be coming to an end.
• Warsh summed up the mood with a clear message: things are changing. Traders accustomed to detailed guidance and carefully managed expectations may need to get comfortable with a little more uncertainty.

✂️ Less Talking, More Policy

• One of the biggest surprises was what didn’t happen. Warsh declined to submit his own economic projections, including a forecast for future interest rates.
• That aligns with his long-held criticism of the Fed’s famous “dot plot.” These are simply dots placed by officials, indicating where rates are going next. In other words, forward guidance.
• Forward guidance is central-bank speak for giving investors hints about where borrowing costs might go next. Under Warsh, those hints appear to be in short supply. His message was simple: “The Committee will deliver price stability.”
• The Fed also trimmed its policy statement down to just four concise paragraphs. Gone was much of the lengthy forward guidance that markets have relied on for years to anticipate future rate moves.

📈 Inflation Takes Center Stage

• While rates were left unchanged, the updated projections showed policymakers growing increasingly concerned about persistent inflation. Several officials now see a path that could require tighter policy and potentially higher rates ahead.
• Warsh also announced new task forces to review everything from Fed communications and economic data to productivity, jobs, inflation, and balance-sheet policy.
• By the end of 2026, the Fed could look very different from the institution investors grew accustomed to under Jay Powell. For the dollar, that prospect was enough to keep buyers interested.

Source: Tradingview