29.04.202610:55 Forex Analysis & Reviews: Last Fed meeting for Jerome Powell

The US dollar is feeling fairly confident amid uncertainty about the economic outlook and a change of leadership at the US central bank. All this will, to some extent, affect the outcome of the Federal Reserve meeting, where rates are expected to remain unchanged.

The sharp rise in energy prices and supply chain disruptions caused by the war with Iran have increased the likelihood of higher inflation and slower growth, prompting policymakers to signal a willingness to wait. However, recent US inflation data were not as bad as many had feared. At the same time, the Federal Open Market Committee is expected to keep its key policy rate in the 3.5%–3.75% range for a third consecutive meeting.

This cautious central bank's stance reflects a complex economic picture in which inflationary pressure remains but is not at a level requiring emergency action. Moderating consumer inflation growth offers hope for stabilization, yet geopolitical instability and its impact on energy markets remain sources of uncertainty.

Investors will scrutinize every Fed move in an attempt to predict the next steps. Holding the rate steady may be read as a signal that the regulator does not want to risk prematurely stimulating—or, conversely, restraining—the economy. That creates a period of waiting, during which the market will reassess the balance between inflation risks and the need to support growth.

At the press conference, which is likely to be Jerome Powell's last as Federal Reserve chair, investors will search for clues about how long the Fed intends to maintain its wait?and?see approach. More intriguingly, they will listen for what Powell says about his own future at the central bank. The current chair has suggested he might remain a member of the Board of Governors after his chairmanship ends on May 15.

A press conference by Powell will follow the publication of the meeting statement.

Powell will almost certainly be asked how recent political events could affect his decision to stay or leave the Fed. That refers to criminal proceedings by the US Department of Justice. The recent decision by US District Attorney Jeanine Pirro to drop the criminal investigation into the Federal Reserve potentially clears the way for President Donald Trump's nominee, Kevin Warsh, to become Fed chair. However, that does not guarantee the current chair's resignation. Many market participants are watching this closely, given the intense pressure President Trump is applying to the Fed to cut rates sharply.

Unanimity within the Fed also seems unlikely. Fed governor Steven Miran may voice dissent from the majority's decision, as he has at every meeting since joining the Fed in September last year.

EUR/USD technical picture

Buyers now need to take 1.1720. Only that would allow a target of 1.1752. From there, the currency pair can reach 1.1791, but doing so without support from large players will be difficult. The far target is 1.1822. On a drop, I expect meaningful buyer activity only around 1.1690. If there are no buyers there, it would be better to wait for a new low at 1.1670 or to open long positions from 1.1640.

GBP/USD technical picture

Pound buyers need to take the nearest resistance at 1.3520. Only that would allow a move to 1.3550, above which a breakout will be difficult. The far target is around 1.3585. On a fall, bears will try to seize control of 1.3490. If they succeed, a break of the range would deal a serious blow to bulls and push GBP/USD to 1.3470 with a prospect of moving toward 1.3445.