Forex News

The Federal Reserve's (Fed) latest dot plot projections, released by the Federal Open Market Committee (FOMC) on Wednesday, show policymakers now expect interest rates to stand at 3.8% by the end of 2026, up from 3.4% in March and above the current midpoint of the target range, signaling that officials now see a possible rate hike this year.

For 2027, officials project the federal funds rate at 3.6%, higher than the 3.1% estimate published in March. The rate is expected to ease to 3.4% in 2028, also above the previous 3.1% projection. The longer-run rate remains unchanged at 3.1%.

The Fed also revised its economics projections. The US Gross Domestic Product (GDP) is now projected at 2.2% this year, down from the previous forecast of 2.4%. For 2027, the U.S. economy is expected to grow by 2.3%, unchanged from previous estimates.

The unemployment rate is expected to be at 4.3% by the end of 2026, down from the previously estimated 4.4%. The jobless rate is projected to remain at 4.3% in 2027, matching March projections.

Finally, the Personal Consumption Expenditures (PCE) inflation is estimated to rise by 3.6% by the end of 2026, significantly above the 2.7% projected in March. In 2027, PCE inflation is projected at 2.3%, slightly higher than the 2.2% projected previously. By 2028, the PCE index is expected to reach 2.0%, in line with previous projections.

At the post-meeting press conference, Fed Chair Kevin Warsh explains why policymakers decided to keep interest rates unchanged following the June meeting and takes questions from reporters on the decision.

Warsh’s press conference highlights

Warsh said the Committee's goal is to get monetary policy right and stressed that the Fed's dual mandate of price stability and maximum employment guided today's meeting.

He noted that economic activity continues to expand at a solid pace.

Warsh said inflation remains well above the Fed's 2% target and argued that persistently high prices continue to burden households and businesses.

He added that FOMC members are unanimous in their commitment to restoring price stability.

Warsh said a change in leadership provides a timely opportunity to review the Fed's practices and reaffirm its mission.

He noted that today's policy statement was shorter and simpler, explaining that it was designed to focus on the facts.

Warsh said forward guidance was omitted because it is not well suited to the current policy environment.

He added that the Committee did not provide projections today.

Warsh announced the creation of several task forces focused on monetary policy.

He said the groups will study communications, the balance sheet, data sources, productivity and jobs, and the Fed's inflation frameworks.

Warsh noted that each task force will include experts from inside and outside the economics profession and will be supported by Fed staff.

He said the groups will ultimately propose recommendations for future policy and operational changes.

Warsh said he expects the review process to result in proposed changes, including possible modifications to the Summary of Economic Projections.

He noted that the balance sheet task force will examine the benefits and risks of the ample reserves framework.

Warsh said the data task force will explore new data sources and methodological improvements.

He added that the productivity and jobs group will assess the impact of artificial intelligence and other general-purpose technologies on the economy.

Warsh also said the inflation frameworks task force will examine the underlying drivers of inflation.

He stressed that all task forces share the objective of improving the Fed's policymaking framework.

Warsh said the Fed's 2% inflation target remains its longstanding objective.

He said he sees no reason to revisit that target until the Fed has successfully returned inflation to 2%.

Warsh stressed that the Fed has both the commitment and the capability to deliver 2% inflation.

He argued that inflation is primarily determined by monetary policy.

Warsh reiterated that the Fed has dropped forward guidance and said he could not provide any indication about future policy decisions.

He noted that monetary policy appears restrictive for the housing market, though less so for financial markets.

Warsh said policymakers do not feel bound by their individual rate projections.

He added that he did not hear strong conviction from policymakers regarding the projections submitted in the latest Summary of Economic Projections.

Warsh stressed that the Committee's commitment to returning inflation to 2% is strong, unanimous and unambiguous.

This section below was published at 18:00 GMT to cover the Federal Reserve's policy decisions and the immediate market reaction.

At its June meeting, the Federal Reserve (Fed) kept its Fed Funds Target Range (FFTR) unchanged at 3.50%–3.75%, right in line with what markets were expecting.

Highlights from the FOMC statement

The Committee said inflation remains elevated relative to its 2% objective, partly reflecting supply shocks that have pushed prices higher in certain sectors, including energy.

Policymakers noted that economic activity continues to expand at a solid pace despite elevated uncertainty linked in part to the conflict in the Middle East.

The Fed highlighted strong productivity growth and capital investment, suggesting underlying economic momentum remains resilient.

Officials said job gains have kept pace with workforce growth and that the unemployment rate has changed little.

The decision to keep rates unchanged at 3.50%-3.75% was unanimous.

Key takeaways from the Summary of Economic Projections (SEP)

Fed officials now see PCE inflation ending 2026 at 3.6%, up sharply from 2.7% projected in March. Core PCE inflation was also revised higher to 3.3% from 2.7%.

Importantly, the Fed still does not expect inflation to return to its 2% target until 2028.

The median projection for the federal funds rate at the end of 2026 rose to 3.8% from 3.4% previously.

The end-2027 median increased to 3.6% from 3.1%, while the end-2028 projection rose to 3.4% from 3.1%.

Officials trimmed their 2026 GDP growth forecast to 2.2% from 2.4%.

The unemployment rate projection for the end of 2026 was revised slightly lower to 4.3% from 4.4%.

Market reaction to Fed policy announcements

The US Dollar leaves behind two daily pullbacks in a row on Wednesday, prompting the US Dollar Index (DXY) to advance markedly and approach its psychological 100.00 mark amid a positive tone in US Treasury yields across the curve while investors continue to assess the Fed’s interest rate decision.

This section below was published at 10:00 GMT as a preview of the Federal Reserve's policy announcements.

• The US Federal Reserve is expected to leave the policy rate unchanged for the fourth consecutive meeting in June. 
• The revised Summary of Economic Projections will provide key clues on potential rate hikes.
• All eyes will be on the new Fed Chair Kevin Warsh’s comments.

The United States (US) Federal Reserve (Fed) announces its interest rate decision on Wednesday, another pivotal meeting for markets to gauge the stance of policymakers and new Chair Kevin Warsh as energy prices retreat after the United States and Iran reached a framework deal to reopen the Strait of Hormuz.

Markets widely expect the Federal Open Market Committee (FOMC) to keep interest rates unchanged in the range of 3.5%-3.75% for the fourth consecutive meeting in June.  

As this decision is fully priced in, the revised Summary of Economic Projections (SEP) and Fed Chair Warsh’s comments in his first post-meeting press conference will grab all the attention as they could offer key clues on the policy outlook and thus drive the US Dollar’s (USD) performance. 

Despite the recent decline in crude Oil prices, markets still see a relatively strong probability of the Fed tightening the policy later in the year. According to the CME FedWatch Tool, investors are currently pricing in about a 58% probability that the Fed will raise the interest rate by 25 basis points (bps) at least once by end-2026. 

After fluctuating at around $65 per barrel before the US and Israel launched a joint attack on Iran on February 28, the West Texas Intermediate (WTI) rose to its highest level since June 2022 above $110 by mid-March. Since the first temporary ceasefire agreement between the US and Iran was announced in early April, Oil prices corrected lower but remained elevated relative to pre-war levels. With the latest deal finally paving the way for the reopening the Strait of Hormuz, WTI declined further and broke below $80. 

Policymakers will take this development into account when penciling down their macroeconomic projections and interest rate expectations. 

Previewing the Federal Open Market Committee (FOMC) meeting, “the policy rate will remain unchanged with likely hawkish changes in communications,” said TD Securities analysts.

“The easing bias will be dropped with hawkish adjustments to the SEP and dot plot. The uncertainty lies in new Fed Chair Warsh's press conference. A strong pushback from Warsh is unlikely as that would damage his credibility and effectiveness towards his long-term, reform-minded agenda,” they added.

When will the Fed announce its interest rate decision and how could it affect EUR/USD?

The Fed is scheduled to announce its interest rate decision and publish the monetary policy statement, alongside the SEP at 18:00 GMT. This will be followed by Fed Chair Kevin Warsh’s press conference starting at 18:30 GMT. 

The latest SEP published in March showed that policymakers’ median projection pointed to a 25 basis points (bps) cut this year, unchanged from the SEP published in December 2025. It won’t be a surprise if there are hawkish revisions in the SEP given the changes in the macroeconomic backdrop.

Nevertheless, the market positioning suggests that the USD has room on the upside if the document shows that a majority of policymakers project at least one rate hike by the end of the year. In this scenario, market participants could continue to price in a rate hike and fuel another leg higher in US Treasury bond yields and the USD, causing EUR/USD to stretch lower.

Conversely, the USD could come under pressure if the SEP shows that a majority of policymakers expect to keep the policy rate unchanged for the rest of the year. Although this would still be a hawkish revision when compared to the March SEP, it would still be a less hawkish outlook than what markets are currently expecting. 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 pushes back market expectations for a rate hike and adopts an optimistic tone about the inflation outlook, now that Oil prices are coming back down, the USD could struggle to find demand. In the less likely scenario, Warsh could acknowledge strong labor market data and refrain from delivering a dovish message. 

ING strategists Francesco Pesole, Chris Turner and Frantisek Taborsky note that the US Dollar (USD) is supported by strong US data and Fed expectations despite sharply lower Oil prices. 

"The Dollar can stay resilient, but needs a nod from policymakers (especially from new Chair Kevin Warsh) that rate hikes are a real possibility,” they add. “This keeps questions around the durability of the oil sell-off open, and FX markets are, for now, reluctant to fully price in that optimism.”

In summary, the USD’s valuation, and EUR/USD’s performance, will depend on how convinced Fed policymakers are of a quick return to disinflation. Unless there is a clear message, either within the SEP or from Chair Warsh, that policy-tightening is no longer the preferred path forward, any weakening in the USD could remain short-lived. 

Eren Sengezer, European Session Lead Analyst at FXStreet, provides a short-term technical outlook for EUR/USD:

“The technical outlook is yet to point to a bullish reversal. On the daily chart, the Relative Strength Index (RSI) recovered but is yet to make a decisive breakthrough 50. Additionally, EUR/USD remains well below the 100-day and 200-day Simple Moving Averages (SMAs).”

“On the upside, a key resistance area seems to have formed at 1.1655-1.1675, where the Fibonacci 38.2% retracement of the February-April downtrend, the 100-day SMA and the 200-day SMA converge. In case EUR/USD manages to clear this area, it could face an interim resistance at 1.1730 (Fibonacci 50% retracement) ahead of 1.1800 (Fibonacci 61.8% retracement).”

“Looking south, the first support level could be spotted at 1.1560 (Fibonacci 23.6% retracement) before 1.1500 (static level, round level) and 1.1410 (March 13 low).”

Warsh, at the helm of a hawkish-leaning Fed

New Fed Chair Warsh inherits a committee that consists of mostly hawkish voting and non-voting members. Dallas Fed President Lorie Logan, Cleveland Fed President Beth Hammack and Minneapolis Fed President Neel Kashkari stand out as the most hawkish voters, according to the FXStreet Speechtracker scores.

In a speech on May 27, Kashkari scored 7.4/10 on the FXS Speechtracker, modestly above the 7/10 historical average and thus slightly more hawkish relative to the established baseline. The speech leaned clearly toward vigilance on inflation as he stressed that the risk to the US inflation now outweighs the risk of labour-market deterioration. Kashkari also noted that most post-April data point to higher inflationary risks and that a Middle East war shock could keep global price pressures elevated. 

Fed’s Logan delivered a distinctly more hawkish tone on June 3, with an FXS Speechtracker score of 8.2/10. The remark that “inflation is trending toward the mid-2s, not all the way to 2%” and that trimmed-mean inflation is “not currently a reliable signal,” alongside comments that financial conditions are accommodative, the labor market is stable, and corporate earnings are “going gangbusters,” underscored concern that inflation is taking too long to return to target. By stressing that monetary policy is not restraining the economy and expressing increasing concern that higher interest rates could be necessary later this year, the speech pushed the policy narrative further into hawkish territory.

If Warsh intends to convince policymakers of the need for policy-easing, he will have an uphill battle. Some of the more neutral members, such as New York Fed President John Williams and Fed Governor Jerome Powell, could be inclined toward holding settings steady but they are unlikely to support rate cuts until there is convincing evidence that inflation is moving back toward the target, or there is a persistent and clear deterioration in labor market conditions.

• USD/JPY trades near intervention levels after the Fed kept rates unchanged at 3.50%-3.75%.
• The Fed removed its reference to “additional rate adjustments,” reinforcing a more cautious and data-dependent policy stance.
• Fed projections show 2026 GDP growth revised down to 2.2% from 2.4%, while the dot plot signaled officials remain divided as inflation risks persist.

The USD/JPY pair rises near the 160.40 level after the Federal Reserve (Fed) left interest rates unchanged in the 3.50%-3.75% range, as widely expected, in Kevin Warsh’s first policy meeting as Fed Chair. The US Dollar (USD) surged against the Japanese Yen (JPY) following the Federal Open Market Committee (FOMC) announcement, after posting a daily low of 160.12.

The Fed removed its previous reference to “additional rate adjustments” from the statement, a change markets interpreted as a signal that policymakers are moving toward a more cautious, data-dependent stance.

Fed policymakers now see US Gross Domestic Product (GDP) growth at 2.2% in 2026, down from the 2.4% projected in March, while the longer-run growth estimate was left unchanged at 2%.

The dot plot also reinforced a cautious policy outlook. While markets had been looking for clearer signs of future rate cuts, the median projection continued to indicate that officials remain divided over the next steps, especially as inflation risks remain tied to recent Oil price volatility and geopolitical uncertainty.

Fed Chair Kevin Warsh said policymakers remain focused on inflation risks following the recent moves in energy prices linked to the US-Iran conflict. Although lower Oil prices could ease headline inflation, Warsh signaled that the Fed needs more confidence that price pressures are moving sustainably toward the 2% target.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 160.43, keeping a modest bullish bias as price holds above both the 20-period Simple Moving Average (SMA) at 160.27 and the 100-period SMA at 159.95. The cluster of nearby supports around 160.31 and 160.27 suggests underlying demand on shallow pullbacks, while the Relative Strength Index (RSI) near 56 hints at firm but not overstretched upside momentum.

On the topside, immediate resistance is seen at the recent horizontal cap near 160.48, and a clear break above this barrier would open the way for a continuation of the advance. On the downside, initial support is aligned at 160.31, followed by the prior horizontal floors at 160.15 and 160.12, with the 100-period SMA at 159.95 reinforcing the broader constructive setup as long as it holds.

(The technical analysis of this story was written with the help of an AI tool.)

• Fed holds rates steady, but dot plot splits hawkishly.
• Core PCE forecast stays well above the Fed’s target.
• Removed guidance leaves traders focused on Warsh’s policy tone.

The British Pound (GBP) collapses during the North American session on Wednesday as the Federal Reserve (Fed) kept interest rates unchanged, but the dot plot hinted at a divided central bank, with half of the 18 dots forecasting higher interest rates by the end of 2026, which boosted the Greenback. The GBP/USD pair trades volatily within the 1.3350-1.3400 range, down 0.52%.

Sterling GBP/USD slides as Fed projections revive higher-rate risks

In the statement, the Fed eliminated forward guidance language, marking Kevin Warsh’s first lead on monetary policy. The Fed recognized that the economy continues to grow strongly despite uncertainties surrounding the Middle East conflict, and noted that the jobs market remains stable, with the unemployment rate staying nearly unchanged.

Furthermore, “Inflation remains elevated relative to the Committee’s 2 per cent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.”

The Summary of Economic Projections (SEP) indicates that the median forecast is for the Fed Funds Rate to finish at 3.8%, up from 3.4% in March. The economy is expected to expand by 2.2% by the end of 2026. Meanwhile, Core PCE, the Fed’s preferred inflation measure, is projected at 3.3%, which is 1.3% above the Fed’s 2% target.

GBP/USD reaction to the decision

The GBP/USD tanked to a four-day low of 1.3334 before finding some relief, yet traders are bracing for the press conference of the new Fed Chair, Kevin Warsh. If he leans dovish, a recovery towards 1.3400 is possible, but most of the Federal Open Market Committee (FOMC) favors higher rates. If that’s reassured by Warsh, a test of 1.3300 is on the cards.

• EUR/USD dropped to its weakest level of the session after the June Federal Reserve decision.
• New projections flipped the 2026 rate path from a cut to a hike bias.

The Federal Reserve (Fed) left the federal funds rate at 3.50% to 3.75% on Wednesday, but the hold was the least interesting part of Kevin Warsh's first meeting as Chair. The Federal Open Market Committee (FOMC) delivered it on a unanimous 12 to 0 vote, a sharp break from April's fractured 8 to 4 split, and the statement dropped its easing bias entirely. The language on the timing of future adjustments vanished, replaced by a flat pledge to restore price stability.

The updated Summary of Economic Projections (SEP) did the real damage. The median 2026 federal funds projection jumped to roughly 3.8% from 3.4% in March, flipping the signal from a cut to a hike bias. The driver was a startling inflation revision: the median 2026 Personal Consumption Expenditures (PCE) forecast leapt to 3.6% from 2.7%, with the core reading marked up to 3.3%. The Fed has not merely shelved cuts; it has joined the hawks.

EUR/USD bore the brunt, falling close to 50 pips on the release from just below 1.1600 to the 1.1550 region, its lowest print of the day after a quiet, range-bound session.

The bias is bearish while price holds beneath 1.1550, with 1.1500 the obvious magnet below; only a reclaim of 1.1600 would suggest the move is being faded. Attention now turns to Warsh's first press conference as Chair at 18:30 GMT, the first test of how firmly he stands behind the hawkish dots.

EUR/USD 5-minute chart

• DXY surged to a session high after the June Federal Reserve decision.
• New projections flipped the 2026 rate path from a cut to a hike bias.

The Federal Reserve (Fed) held the federal funds rate at 3.50% to 3.75% on Wednesday, but Kevin Warsh's first meeting as Chair was anything but a placeholder. The Federal Open Market Committee (FOMC) backed the hold unanimously, 12 to 0, a stark change from the four-way 8 to 4 split in April, and the statement stripped out its easing bias. The reference to the timing of future moves disappeared, replaced by a flat pledge to restore price stability.

The updated Summary of Economic Projections (SEP) carried the punch. The median 2026 federal funds projection climbed to roughly 3.8% from 3.4% in March, turning the signal from a cut into a hike bias. The cause was inflation: the median 2026 Personal Consumption Expenditures (PCE) forecast vaulted to 3.6% from 2.7%, with the core reading lifted to 3.3%. After months of cut talk, the Fed has thrown in with the hawks.

The US Dollar Index (DXY) ripped higher on the release, spiking through the 100.00 handle to a session high just above it after hovering in the high 99.60s into the decision.

The bias is bullish while DXY holds above 100.00, with 100.50 and then 101.00 the upside markers; a slip back beneath 100.00 would call the breakout into question. Focus shifts to Warsh's first press conference as Chair at 18:30 GMT, the first read on how firmly he intends to defend the hawkish dots.

US Dollar Index 5-minute chart

• Gold tumbles as traders digest the first Fed policy decision with Chair Kevin Warsh.
• Fed holds rates steady, but dot plot signals hawkish split.
• SEP sees Core PCE at 3.3%, above target.

Gold (XAU/USD) price declines as the Federal Reserve (Fed) keeps rates steady at 3.50% to 3.75% on Wednesday, while the Summary of Economic Projections (SEP) shows policymakers expect inflation above the 3% threshold. At the time of writing, XAU/USD trades volatily within the $4,330-$4,280 range.

XAU/USD swings as Warsh’s Fed removes guidance

In the statement, the Fed removed forward guidance language, in what was Kevin Warsh’s first lead on monetary policy. The Fed acknowledged that the economy is expanding solidly, despite uncertainty about the Middle East conflict and that the jobs market remains steady, keeping the unemployment rate little changed.

Furthermore, “Inflation remains elevated relative to the Committee’s 2 per cent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.”

The Summary of Economic Projections (SEP) shows that the median expects the Fed Funds Rate to end at 3.8%, up from March’s 3.4%, with the economy expected to grow 2.2% towards the end of 2026, and Core PCE, the Fed’s favorite inflation gauge at 3.3%, 1.3% above the Fed’s 2% goal.

Gold’s reaction

The yellow metal is tumbling, due to the hawkish tilt observed in the dot plot with half of the FOMC members expecting rates above the 3.75% threshold, while the rest opted to keep rates unchanged. There is speculation that Warsh opted not to provide forward guidance in the dot plot.

• USD/CHF holds inverse head-and-shoulders above 200-day SMA support.
• Flat RSI slope signals indecision despite bullish momentum backdrop.
• Break above 0.7950 exposes 0.8013 and 0.8042 resistance.

The USD/CHF pair remains steady on Wednesday as market participants await the US central bank's monetary policy decision, with the Federal Reserve expected to hold rates unchanged. At the time of writing, the pair trades at 0.7932, flattish.

USD/CHF Price Forecast: Technical outlook

Price action shows that the ‘inverse head-and-shoulders’ remains intact, with the USD/CHF spot price sitting above the 200-day Simple Moving Average (SMA) at 0.7905, usually sought for investors and algos, as a trend-setter signal in the long term.

The Relative Strength Index (RSI) shows that momentum is bullish, though the index’s slope is horizontal, an indication of indecision amongst traders.

Above, the USD/CHF's first key resistance is the 0.7950 psychological level, followed by the June 11 swing high at 0.8013. Once hurdled, the next stop would be the March 31 high of 0.8042, which is also the ‘inverse head-and-shoulders’ measured target, ahead of 0.8050.

On the flip side, if the pair slides below the 200-day SMA, it opens the door to clear the 0.7900 figure. A breach of the latter will expose the confluence of the 50-day SMA and the June 4 daily low of 0.7868, followed by the 100-day SMA at 0.7841. Below these levels lies the 0.7800 figure.

USD/CHF Price Chart – Daily

• US Retail Sales strength challenges claims that policy is restrictive.
• Fed dot plot could revive year-end hike speculation.
• Trump’s Iran warning keeps geopolitical risks in focus.

Gold (XAU/USD) price rises 0.77% on Wednesday as traders await the Federal Reserve’s (Fed) monetary policy decision, the first one led by Kevin Warsh, in which the central bank is expected to keep rates steady amid the jump in inflation sparked by the Iran war. At the time of writing, the XAU/USD pair trades at $4,358 after bouncing off daily lows of $4,317.

XAU/USD rises as traders brace for Fed projections

The yellow metal advances amid growing speculation that the Fed could turn slightly hawkish in Warsh’s first meeting at the central bank. Last week, the US CPI and PPI prints were higher than expected, and a strong May Retail Sales report suggests that policy is not as tight as some Fed officials have expressed.

In addition to the Fed’s decision, officials will update their economic projections regarding GDP, inflation and the path of interest rates towards the end of 2026.

US Retail Sales for May rose 0.9% MoM, beating the 0.5% forecast, as per the US Census Bureau. Gas station sales were up 3.4% due to higher gasoline prices amid Iran tensions. The data shows consumer resilience, with 11 of 13 categories growing.

So far, Prime Terminal data shows that traders estimate a 20% probability that the Federal Reserve might increase interest rates by the end of 2026.

US Treasury yields remained steady ahead of the Fed’s decision. The US 10-year Treasury note yield is flat at 4.432%. The Greenback is posting modest gains of 0.01% according to the US Dollar Index (DXY). The DXY, which measures the buck’s value against a basket of six peers, is at 99.69.

Geopolitical noise has tempered since the US and Iran agreed on a Memorandum of Understanding (MOU) setting the stage for a 60-day truce, aimed at talking about Tehran’s nuclear program and that they are not allowed to acquire nuclear weapons. Earlier, US President Donald Trump said that the agreement is not final and that he could resume bombing if Iran does not behave.

XAU/USD technical outlook: Gold advances, but stalls near $4,400

Gold price remains in a sideways rotation, with investors waiting for Warsh’s first policy decision. Momentum remains mixed, as depicted by the Relative Strength Index (RSI). The RSI is aiming upwards, though in bearish territory, a reading that hints caution.

If XAU/USD clears the 200-day Simple Moving Average (SMA) decisively at $4,458, the next resistance would be the $4,500 milestone. Above this area sits the 50-day SMA at $4,571.

Downwards, Gold’s first support is the June 15 swing low of $4,262, ahead of the $4,200 psychological level. Below this area, the next area of interest would be the June 11 swing low of $4,023, ahead of the $4,000 mark.