Date: 22nd April 2026.
Middle East De-escalation Pressures the Dollar Despite Warsh Hearing.
The US Dollar is seeing notable price swings and heightened volatility. Investors are closely watching Kevin Warsh’s hearing, while also reacting to fresh developments in the Middle East. Yesterday, the Dollar was the best performing currency largely due to Warsh reinforcing the Federal Reserve’s independence and tackling inflation.
However, the currency is correcting back downwards this morning as the market prices in de-escalation within the Middle East. The best-performing currencies during this morning’s Asian session are the New Zealand Dollar and Australian Dollar. This is due to their recent high inflation reports, which are most likely going to prompt a hawkish monetary policy.
Meanwhile, US investors are assessing the Senate Banking Committee hearing of Kevin Warsh, a candidate for Chair of the US Federal Reserve. Known for supporting balance sheet reduction, Warsh is seen by analysts as someone who could reduce market liquidity, lift government bond yields, and strengthen the US Dollar. Bond yields rose on Tuesday, which is positive for the Dollar, but are retracing this morning so far.
His remarks echoed themes from earlier this week, including a ‘regime change’ in monetary policy and a new inflation framework. Markets saw this as a possible signal of tighter conditions. A day earlier, Donald Trump told CNBC he would be disappointed if Warsh did not cut borrowing costs immediately. That would follow Senate confirmation.
However, Wells Fargo CEO Charlie Scharf said that would be the wrong move. He wants more clarity on a possible end to the Iran conflict. He warned a prolonged escalation could hurt household budgets and fuel inflation.
Most economists say policy will likely remain uncertain until Kevin Warsh holds his first press conference as Fed Chair. Currently, some senators are delaying approval until the government drops charges against current Chair Jerome Powell over the building refurbishments.
While some of the factors above are supportive for the US Dollar, easing tensions in the Middle East are weighing on the currency. This is because lower geopolitical risk tends to reduce demand for safe-haven assets.
The price of the GBPUSD is moving in favour of the British Pound despite political and economic risks to the UK. The exchange rate has dipped in the past few days but continues to show little bearish strength and momentum. As a result, the GBPUSD continues to maintain a bullish bias with many indicators. However, if the US Dollar Index gains momentum, the exchange rate may again fall, similar to February and March.
HFM - GBPUSD 1-Hour Chart
UK macroeconomic expectations have worsened this year amid rising geopolitical risks and weaker business activity. Analysts at Ernst & Young and Deloitte point to the prolonged US–Iran conflict as a key factor, as it is disrupting global supply chains and pushing energy costs higher. EY expects the UK economy to stagnate in the second and third quarters, with annual growth slowing from 1.4% in 2025 to 0.7% this year.
Analysts expect the labour market to weaken, with unemployment projected to reach 5.8% by mid-2027, implying around 250,000 job losses. Inflation may approach 4.0% in the second half of the year, well above the Bank of England’s 2.0% target.
This morning, the UK’s inflation rate was confirmed to have risen from 3.0% to 3.3% as expected. Investors will now turn their attention to the UK’s Services and Manufacturing PMI reports tomorrow morning.
The main factor supporting NZD/USD was stronger Q1 inflation data. Headline CPI rose from 0.6% to 0.9% (QoQ), above the 0.8% forecast.
The details were more concerning, with non-tradable inflation, a key measure of domestic price pressure, rising 1.1% versus the RBNZ’s 0.9% estimate, and reaching 3.5% annually. Tradable inflation was lower at 0.7% quarterly and 2.5% yearly. These figures also do not yet fully reflect the impact of disruptions linked to the US-Iran conflict and the Strait of Hormuz supply risks. As a result, investors have raised expectations for tighter monetary policy, with a rate hike now priced in by July and up to three 25-basis-point increases expected by year-end.
HFM - NZDUSD 1-Hour Chart
The New Zealand Dollar is one of the best-performing currencies of April and is trading above key Moving Averages. However, the resistance level at 0.59215 is a real concern for technical analysts. The asset has fallen at this resistance level on five occasions over the past week alone.
Key Takeaways:
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HFM Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Michalis Efthymiou
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
Middle East De-escalation Pressures the Dollar Despite Warsh Hearing.
The US Dollar is seeing notable price swings and heightened volatility. Investors are closely watching Kevin Warsh’s hearing, while also reacting to fresh developments in the Middle East. Yesterday, the Dollar was the best performing currency largely due to Warsh reinforcing the Federal Reserve’s independence and tackling inflation.
However, the currency is correcting back downwards this morning as the market prices in de-escalation within the Middle East. The best-performing currencies during this morning’s Asian session are the New Zealand Dollar and Australian Dollar. This is due to their recent high inflation reports, which are most likely going to prompt a hawkish monetary policy.
Meanwhile, US investors are assessing the Senate Banking Committee hearing of Kevin Warsh, a candidate for Chair of the US Federal Reserve. Known for supporting balance sheet reduction, Warsh is seen by analysts as someone who could reduce market liquidity, lift government bond yields, and strengthen the US Dollar. Bond yields rose on Tuesday, which is positive for the Dollar, but are retracing this morning so far.
His remarks echoed themes from earlier this week, including a ‘regime change’ in monetary policy and a new inflation framework. Markets saw this as a possible signal of tighter conditions. A day earlier, Donald Trump told CNBC he would be disappointed if Warsh did not cut borrowing costs immediately. That would follow Senate confirmation.
However, Wells Fargo CEO Charlie Scharf said that would be the wrong move. He wants more clarity on a possible end to the Iran conflict. He warned a prolonged escalation could hurt household budgets and fuel inflation.
Most economists say policy will likely remain uncertain until Kevin Warsh holds his first press conference as Fed Chair. Currently, some senators are delaying approval until the government drops charges against current Chair Jerome Powell over the building refurbishments.
While some of the factors above are supportive for the US Dollar, easing tensions in the Middle East are weighing on the currency. This is because lower geopolitical risk tends to reduce demand for safe-haven assets.
The price of the GBPUSD is moving in favour of the British Pound despite political and economic risks to the UK. The exchange rate has dipped in the past few days but continues to show little bearish strength and momentum. As a result, the GBPUSD continues to maintain a bullish bias with many indicators. However, if the US Dollar Index gains momentum, the exchange rate may again fall, similar to February and March.
HFM - GBPUSD 1-Hour Chart
UK macroeconomic expectations have worsened this year amid rising geopolitical risks and weaker business activity. Analysts at Ernst & Young and Deloitte point to the prolonged US–Iran conflict as a key factor, as it is disrupting global supply chains and pushing energy costs higher. EY expects the UK economy to stagnate in the second and third quarters, with annual growth slowing from 1.4% in 2025 to 0.7% this year.
Analysts expect the labour market to weaken, with unemployment projected to reach 5.8% by mid-2027, implying around 250,000 job losses. Inflation may approach 4.0% in the second half of the year, well above the Bank of England’s 2.0% target.
This morning, the UK’s inflation rate was confirmed to have risen from 3.0% to 3.3% as expected. Investors will now turn their attention to the UK’s Services and Manufacturing PMI reports tomorrow morning.
The main factor supporting NZD/USD was stronger Q1 inflation data. Headline CPI rose from 0.6% to 0.9% (QoQ), above the 0.8% forecast.
The details were more concerning, with non-tradable inflation, a key measure of domestic price pressure, rising 1.1% versus the RBNZ’s 0.9% estimate, and reaching 3.5% annually. Tradable inflation was lower at 0.7% quarterly and 2.5% yearly. These figures also do not yet fully reflect the impact of disruptions linked to the US-Iran conflict and the Strait of Hormuz supply risks. As a result, investors have raised expectations for tighter monetary policy, with a rate hike now priced in by July and up to three 25-basis-point increases expected by year-end.
HFM - NZDUSD 1-Hour Chart
The New Zealand Dollar is one of the best-performing currencies of April and is trading above key Moving Averages. However, the resistance level at 0.59215 is a real concern for technical analysts. The asset has fallen at this resistance level on five occasions over the past week alone.
Key Takeaways:
- Warsh’s hearing initially supported the US Dollar, but easing Middle East tensions are now pressuring it lower.
- Markets view Warsh’s stance on Fed independence, inflation, and balance sheet reduction as supportive of the Dollar.
- GBP/USD is still holding a bullish tone. This is despite weakening UK growth expectations, rising inflation, and concerns over the labour market.
- The New Zealand Dollar is gaining support from inflation. Stronger CPI data has boosted expectations of RBNZ rate hikes, though 0.59215 remains a key resistance level for NZD/USD.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HFM Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Michalis Efthymiou
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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