Warsh Confirmed 51-45 to Fed Board; Chair Vote Wednesday

• The 51-45 vote adds a hawkish member to the Board immediately.
• The Senate now turns to the Fed Chair nomination on Wednesday.
• Dollar and short-end Treasury yields repriced higher in the initial reaction.
• The rate differential between the US and the eurozone widened marginally, pressuring EUR/USD.

The mechanism is straightforward: a more hawkish Board implies a later start to rate cuts, which keeps the dollar's yield advantage intact. The forex market analysis shows that the greenback has been sensitive to any shift in the expected terminal rate. The Warsh confirmation provides a concrete reason to push back the timing of the first cut, and the EUR/USD profile reflects that sensitivity.

The dollar's move also drew support from the ongoing repricing in the Treasury market. The recent $42B 10-Year Auction Tails 0.4 bps as Yield Hits 4.468% had already signaled that demand for duration was thinning. The Warsh vote added a policy-layer reason for yields to stay elevated. The combination of supply indigestion and a hawkish Board shift kept the dollar bid.

Chair Vote Wednesday as Next Catalyst

The Senate's vote on the Fed Chair nomination is scheduled for Wednesday. That decision will set the tone for the entire policy framework over the next four years. A smooth confirmation would lock in the current policy trajectory. A contentious vote, or any unexpected delay, would inject a fresh layer of uncertainty into the rate outlook.

The dollar's reaction to the Warsh vote offers a template for Wednesday. A confirmation that reinforces the hawkish tilt would likely extend the dollar's gains. A surprise, however unlikely, would unwind some of the rate support. The dollar's recent strength has been built on a foundation of relative policy tightness. The Chair vote is the next brick in that wall.