Warsh Confirmation Drives Dollar Higher; EUR, GBP Fall

Kevin Warsh was confirmed as chair of the Federal Reserve, and his swearing-in is scheduled for Friday. Financial markets immediately priced in a firmer policy stance, sending the U.S. dollar higher and pushing the dollar index toward the 100 level. Major currency pairs EUR/USD and GBP/USD fell on the confirmation.

Traders are positioning for faster reduction of the Fed’s balance sheet and for policy rates to remain higher for longer. Warsh has previously supported a smaller central bank balance sheet and tighter monetary conditions. Market participants cited ongoing supply-chain disruptions and rising oil prices as factors that make near-term rate cuts less likely.

The dollar index has tested the 99.40–99.50 resistance band that capped last week’s spike and is trading in a tight bullish channel above an upward trendline. A sustained move above 99.50 would target the 100.00 area, with prior highs near 100.54 noted as a further ceiling. Immediate support levels are near 99.00, with secondary support around 98.50–98.70 and broader support clustered between 97.40 and the mid-96s from last year’s lows.

EUR/USD came under heavy selling pressure and shows a bearish technical profile, including the 50-period moving average crossing below the 200-period moving average. The pair needs a daily close above the 1.1635–1.1655 pivot to ease pressure, while a decisive close below 1.16 would indicate further downside. Short-term support bands sit at 1.1540–1.1570 and 1.1475–1.1500, with lows near 1.1410 as deeper targets.

GBP/USD failed to sustain a break above the 1.36 resistance and reversed back to the 1.34–1.3450 pivot at the start of the week. Price action suggests a likely retest of 1.33. If that level breaks, the next clear support is around 1.32 with limited intervening demand.

Some market participants have labeled the repositioning the “Warsh Trade,” reflecting bets on more aggressive balance-sheet reduction and extended higher rates. Investors are watching Warsh’s first public remarks for guidance on the pace of shrinkage and the Fed’s operational approach. Short-term traders are also tracking daily closes and macro developments, including oil market moves and supply disruptions, which could influence currency flows.