As a crypto investor, I’m really watching the Fed announcement this Wednesday. It’s a big deal because it gives us clues about where they stand on things – especially with Kevin Warsh now as chair. This meeting could seriously impact market sentiment and, ultimately, my portfolio.
Energy prices are falling now that the United States and Iran have tentatively agreed to reopen the Strait of Hormuz.
Most experts predict the Federal Reserve will hold interest rates steady, remaining between 3.5% and 3.75%, for the fourth time in a row at their June meeting.
Since the market has already accounted for this decision, all eyes will now be on the latest economic forecasts and the Fed Chair’s comments after the meeting. These will likely provide important hints about future policy and influence how the US Dollar performs.
Even though oil prices have recently fallen, most analysts still expect the Federal Reserve to raise interest rates later this year.
The market currently suggests there’s around a 58% chance the Federal Reserve will increase interest rates by a quarter of a percentage point (0.25%) at least once before the end of 2026, according to data from the CME FedWatch Tool.
Before the joint attack by the US and Israel on Iran on February 28th, the price of West Texas Intermediate (WTI) crude oil was hovering around $65 per barrel. By mid-March, however, the price had surged to over $110 – its highest point since June 2022.
After the initial truce between the US and Iran was revealed in early April, oil prices decreased somewhat, though they stayed higher than before the conflict began.
Now that a recent agreement has cleared the path for reopening the Strait of Hormuz, the price of West Texas Intermediate (WTI) crude oil has fallen and dropped below $80 a barrel.
This new information will influence how policymakers forecast the economy and set interest rates.
According to TD Securities analysts, the Federal Reserve is expected to hold interest rates steady at its upcoming meeting, but will likely signal a continued commitment to fighting inflation in its public statements.
Analysts predict the Federal Reserve will stop leaning toward lower interest rates and instead signal a more aggressive approach in its economic projections and forecasts. The main unknown is how new Fed Chair Warsh will handle questions during his first press conference. However, experts believe he’s unlikely to strongly oppose current policy, as doing so could harm his reputation and make it harder to implement his long-term plans for change.
When will the Fed Announce its Interest Rate Decision and How Could it Affect EUR/USD?
The Federal Reserve will announce whether it’s changing interest rates at 18:00 GMT, along with its economic outlook. Immediately after, at 18:30 GMT, Fed Chair Kevin Warsh will hold a press conference to discuss the decision.
The most recent economic projections, released in March, indicated that policymakers expect to lower interest rates by 0.25% this year. This expectation hasn’t changed since the projections were last published in December.
Considering recent shifts in the economic environment, it’s likely that the Summary of Economic Projections will reflect a more aggressive stance.
Even so, current market trends indicate the US dollar could strengthen further if the latest economic report reveals most Federal Reserve officials anticipate at least one interest rate increase before the year is over.
If this happens, traders might expect interest rates to rise, pushing up US Treasury bond yields and the value of the US dollar. This could cause the euro to fall further in value compared to the dollar.
On the other hand, the US dollar might weaken if the Federal Reserve’s economic projections suggest most officials believe interest rates should remain steady for the remainder of the year.
Even if these changes lean towards keeping interest rates high, they’d likely be less aggressive than what investors are predicting.
In this case, EUR/USD could gather recovery momentum.
Comments from Warsh in the post-meeting press conference could also drive the USD’s valuation.
If Warsh signals he doesn’t expect to raise interest rates soon and expresses confidence that inflation is easing, now that oil prices are falling, the US dollar might weaken.
If things don’t go as expected, Warsh might recognize positive job market numbers and avoid signaling a more lenient monetary policy.
According to ING strategists Francesco Pesole, Chris Turner, and Frantisek Taborsky, the US Dollar remains strong due to positive economic data and expectations surrounding the Federal Reserve, even with falling oil prices.
The U.S. dollar could remain strong, but it needs confirmation from Federal Reserve officials – particularly new Chair Kevin Warsh – that interest rates might increase. This uncertainty affects how long the recent drop in oil prices will last, and currency markets are currently hesitant to fully bet on continued optimism about the oil market.
Ultimately, the value of the US dollar and how the euro performs against it will hinge on whether Federal Reserve officials believe inflation will soon fall rapidly.
If there’s no strong signal – either from the Federal Reserve’s Summary of Economic Projections or from Chair Warsh – that the Fed is shifting away from raising interest rates, any drop in the US dollar’s value is likely to be temporary.
FXStreet’s Eren Sengezer, who leads European session analysis, offers his near-term technical forecast for the EUR/USD currency pair.
The market isn’t showing clear signs of a turnaround yet. While the Relative Strength Index (RSI) has improved, it hasn’t firmly broken above the 50 level. Also, the EUR/USD exchange rate is still significantly below its 100-day and 200-day moving averages.
The price of EUR/USD appears to be facing a strong resistance level between 1.1655 and 1.1675. This area is significant because it combines a key Fibonacci retracement level, the 100-day Simple Moving Average, and the 200-day Simple Moving Average. If the price breaks above this level, it could initially encounter more resistance around 1.1730, with a further potential hurdle at 1.1800.
According to Sengezer, the currency pair may find initial support around 1.1560 (based on a Fibonacci retracement level of 23.6%). Further down, additional support levels are expected near 1.1500 (a key round number) and 1.1410 (the low from March 13th).
Warsh At the Helm of a Hawkish-Leaning Fed
As the new Federal Reserve Chair, I’m taking over a committee largely composed of members who favor raising interest rates – both those who have a vote and those who don’t. It’s a group generally inclined towards fighting inflation, which will definitely influence our policy discussions.
According to FXStreet’s analysis of recent statements, Dallas Fed President Lorie Logan, Cleveland Fed President Beth Hammack, and Minneapolis Fed President Neel Kashkari have expressed the strongest preference for maintaining higher interest rates.
I recently analyzed a speech given by Kashkari on May 27th using the FXS Speechtracker. It scored a 7.4 out of 10, which is a little higher than the average score of 7 we typically see. This suggests his comments were somewhat more focused on controlling inflation – or ‘hawkish’ – compared to his usual stance.
The speaker focused heavily on keeping inflation under control, emphasizing that the danger of rising prices is currently a bigger concern than potential problems with employment.
Kashkari also pointed out that recent economic data since April suggest inflation might be increasing, and a conflict in the Middle East could worsen global price increases.
On June 3rd, Federal Reserve official Logan spoke with a noticeably stronger emphasis on controlling inflation, scoring an 8.2 out of 10 on the FXS Speechtracker, which measures hawkishness.
Recent statements suggesting inflation is moving towards the mid-2% range, but not quite reaching the 2% goal, along with doubts about the accuracy of certain inflation measures, highlight worries that it will take longer than expected to get inflation under control. These concerns are compounded by observations of easy financial conditions, a strong job market, and high corporate profits.
The speech signaled a shift towards a more aggressive stance on monetary policy. By emphasizing that current policies aren’t slowing down the economy and hinting at potential interest rate hikes later this year, it suggested a willingness to prioritize controlling inflation, even if it means risking economic slowdown.
If Warsh wants to persuade politicians to support policies that would stimulate the economy, he’ll face a significant challenge.
Officials like John Williams, president of the New York Fed, and Fed Governor Jerome Powell might prefer to keep interest rates where they are, rather than raise them.
They probably won’t lower interest rates unless they see strong proof that inflation is coming down, or if the job market significantly weakens and stays that way.
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2026-06-17 15:19