US Dollar: Fed transition and Middle East risks keep ranges intact – DBS

DBS Group Research’s Philip Wee argues that FX Majors remain range-bound as markets digest shifting narratives around Middle East tensions and the upcoming Fed leadership transition. Kevin Warsh’s first FOMC meeting as Fed Chair on June 16–17 comes as inflation re-accelerates and front-end yields rise, while former Chair Powell has warned about central bank independence ahead of a key Supreme Court ruling.

Fed shift and geopolitics anchor Dollar ranges

"As we cross the threshold into June 2026, FX markets are grappling with a sharp, volatile shift in narrative."

"All eyes are on the June 16-17 FOMC meeting, Kevin Warsh’s first at the helm as Fed Chair."

"On the other hand, April's CPI inflation print ticked back up to 3.8% YoY (with whisper numbers pointing toward a breach of 4% if energy pressures sustain), forcing a massive re-pricing in the front end of the curve."

"The bond market lifted the 2Y US Treasury yield to 4.0-4.1% in mid-May, even as the futures markets cap the probability of a Fed hike this year at 30%."

"On May 31, former Fed Chair Jerome Powell used his acceptance speech for the 2026 John F. Kennedy Profile in Courage Award to deliver a blunt, unmistakable warning about central bank independence."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)