The dollar failed to gain traction following yesterday's Fed decision and Chair Kevin Warsh's press conference. The market expected a pause and got one, but traders were looking for something more: a clear signal on whether the Fed will hike interest rates in December. No explicit confirmation came, and without that, the dollar lacked a reason to mount a fresh advance.

The policy rate remained unchanged at 3.75–4.00%. The decision passed by a majority, 10 to 2, with Lisa Cook and Beth Hammack dissenting and advocating an immediate 25-bp hike, underscoring that there are hawks among FOMC members. The committee chose to wait, and that majority determined the outcome.

The Fed's statement painted a confident picture of the economy: activity is growing strongly, domestic spending holds up, labor productivity and business investment are robust, job growth is tracking labor-force gains, and unemployment is essentially unchanged. The Fed said that geopolitical uncertainty remains elevated, and inflation is still too high, noting that the committee will continue to monitor incoming data to return inflation toward the 2% goal.

Warsh's comments echoed that tone. He described the economy as strong and resilient and said Q3 GDP will likely exceed 3%. Business investment is growing in double digits, and hiring has accelerated year-over-year. On inflation, he was blunt: the situation has not improved, and the Fed's job is to reduce it. He did offer some positives: inflation expectations in swap markets have improved, and policy is moving in the right direction.

What mattered for the dollar, though, was the December outlook. Warsh said the Fed needs more time and more data before deciding the next step. He is reluctant to pre-commit to meetings except under crisis conditions, so he would not forecast December. The market had already priced in a year-end rate hike and needed confirmation, but it did not get one. Warsh said the Fed's 18 participants have differing views, and the committee wants greater clarity.

Warsh also noted a changing relationship between oil and yields. Until recently, rising oil helped push market rates higher. That link has shifted, and US Treasury yields have begun to fall. He added that credit conditions have tightened, investors are more cautious in deploying capital, and market volatility is not surprising. For the dollar, that means one of its key supports, high yields, is gradually weakening.

Separately, the Fed announced changes to its meeting schedule. Starting in 2028, there will be six rate-vote meetings instead of eight, with two additional meetings focused on strategy. In 2027, one of eight meetings will be conducted without a vote or statement. Five working groups are already in place, and balance sheet recommendations are due in early 2027. Warsh said there is no need to change the Fed's balance sheet policy now. He declined to comment on Donald Trump's remarks about Fed leadership or on political criticism of the central bank.

Markets now turn to the core PCE price index, the Fed's preferred inflation gauge. In September, headline PCE was 3.4% y/y, and core PCE stood at 3.0% y/y. I think that without a hawkish Warsh, the dollar has limited upside and will likely trade sideways or soften modestly versus the euro and pound in the coming days. But if inflation again surprises to the upside, bets on a December hike will return, and the dollar would quickly regain strength.

As for EUR/USD technicals, reclaiming 1.1150 is the immediate task for buyers. That would open a test of 1.1175 and then 1.1195, although moving higher without support from major players will be difficult. On the downside, I expect significant buyer interest near 1.1130. If that level does not hold, waiting for a break below 1.1110 or considering long positions around 1.1080 would be prudent.

As for GBP/USD technicals, sterling buyers need to take the nearest resistance level of 1.3330 to target 1.3360. A break above it will be challenging, and the next target would be 1.3390. On the downside, bears will look to take control at 1.3300. A break below that level would hit bulls hard, dragging sterling down to 1.3270 and then opening the path toward 1.3240.