Fed Hawkish Path and Warsh Changes: EUR/USD, GBP/USD Analysis

Federal Reserve Chair Kevin Warsh reaffirmed a hawkish stance following the latest FOMC meeting, highlighting that inflation remains elevated despite a resilient labor market. The central bank plans to maintain its current trajectory of raising borrowing costs roughly every other meeting until inflation clearly slows. Without an explicit terminal rate ceiling, markets anticipate a potential third rate hike tentatively expected in March.

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In addition to the policy stance, Warsh introduced a structural change to the FOMC meeting schedule starting in 2027. The Fed will dedicate one of its eight annual meetings exclusively to monetary strategy without issuing a policy communique or voting on rates. By 2028, two non-voting strategy meetings will be held annually, reducing policy rate decisions to six per year to allow more time for strategic discussion and data analysis.

Diverging central bank expectations continue to shape major currency pair performances across the Forex market. While the euro remains under sustained pressure, sterling shows greater technical resilience against the US dollar. GBP/USD traders are also closely monitoring the Bank of England, which could initiate its monetary tightening cycle as early as next week.

EUR/USD Technical Outlook

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EUR/USD remains in a corrective downtrend short-term, supported by persistent dollar strength and the Fed's hawkish stance. While price action trades below the moving average, short positions remain active with downside targets set at 1.1108 and 1.0986. A move above the moving average would signal a potential reversal back to the broader uptrend, opening target levels at 1.1230 and 1.1353.

GBP/USD Technical Outlook

GBP/USD maintains a medium-term bullish bias, trading within a weekly range between 1.3150 and 1.3780. If price action holds above the moving average, long positions remain favorable with upside targets at 1.3428 and 1.3489. Conversely, trading below the moving average opens room for downside targets at 1.3245 and 1.3184.

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