Newsletter · · Ashutosh Agarwal

The Dollar Brief - Week of June 25, 2026: Warsh's Hawkish Debut Lights a Dollar Breakout

Kevin Warsh's first FOMC tore up forward guidance and snapped the dollar index above a year of resistance, flipping J.P. Morgan's FX desk to outright bullish for the week of June 25, 2026. This issue tracks the breakout, the bull-bear standoff, and the unresolved de-dollarization fight.

The Dollar Brief

Week of June 25, 2026: Warsh's Hawkish Debut Lights a Dollar Breakout

For two years the consensus trade was a falling dollar. This week the new Fed chair walked into his first meeting, tore up forward guidance, and the dollar broke out the other way. Almost everyone with a microphone spent the week reacting to it, so this issue is mostly about one man and one chart.

TL;DR

  • Kevin Warsh's first FOMC, a 140-word statement, no dot-plot participation from half the committee, and open talk of a hike, repriced the front end and snapped the dollar index above a year of resistance near 100.
  • J.P. Morgan's FX desk flipped from bearish to outright bullish dollar, with a EUR/USD target down at 110–113; the structural bears (Schiff, Zeberg) say enjoy it now, the real move is a later crisis spike.
  • The de-dollarization fight is loud but unresolved: gold dealers see central banks quietly hoarding bullion while a JPMorgan strategist says, in ounce terms, they're barely adding.

What's new

The dollar broke out, and the move is all about rate differentials. On The KE Report, Bannockburn Global Forex's Marc Chandler called the DXY breakout in real time: "It's at 100.6 right now... it's kind of breaking out when a lot of people were expecting it to fall." He flagged the next target at 102–102.5 and explained the engine has shifted "away from the oil market and towards the short end of the U.S. curve," with dollar/two-year-yield correlations "at the highest we've been in, like, 20 years." His one caveat: momentum indicators are already "stretched."

A big sell-side desk capitulated to the bull case. On J.P. Morgan's At Any Rate, FX strategy head Meera Chandanko said the bearish-dollar leg of their view flipped during the US–Iran conflict: "We are now bullish beta and bullish the dollar, if that is possible." Their EUR/USD downside target of 113 is, in her words, "already out of consensus," with 110 in play. Colleague Patrick Curran put numbers on it: roughly 100bps of rate-differential widening is worth ~4.5% of dollar upside, and historically the broad dollar gains ~5% in the six months before a first hike.

Warsh's debut was the catalyst, and it was a genuine regime change. Ex–Dallas Fed advisor Danielle DiMartino Booth graded him 9/10 on The Julia La Roche Show, describing a "gnat of communications" statement with no forward guidance and Warsh telling the world "non-farm payroll data ain't something I'm following." Whalen Global Advisors' Chris Whalen called it an "inflection point" on the same show's Chris Whalen episode: "Less is more when it comes to the Fed... having a little bit of mystery is good." Fund manager Axel Merk, on Thoughtful Money, noted the market pulled its first-hike pricing forward to September and, tellingly, "the 30-year did not sell off... confirmation that he achieved his mission."

Stablecoins moved from theme to plumbing. With the GENIUS Act now law, former CFTC Commissioner Caroline Pham (now at MoonPay) said on The Wolf Of All Streets that Q1 2026 alone saw "$28 trillion in volume in stablecoins" and that the rails are "dwarfing ACH and SWIFT." Eco CEO Ryan Sachs, on CRYPTO 101, framed GENIUS as the unlock: "we at least have that clarity... of what collateral is allowed. And that's good enough." The dollar angle: 99%-dollar stablecoins quietly export dollar demand, and Treasury-bill demand, offshore.

The debate

Dollar bulls vs. dollar bears. The bull case is cyclical and clean: the US is tiptoeing toward hikes while everyone else tiptoes away. RenMac's Neil Dutta put it plainly on RenMac Off-Script: "policy differentials kind of tip the scales in favor of a stronger dollar... that's a good reason to want to be long the dollar against most G10 FX." Fund manager Brent Johnson, on MacroVoices #537, framed it structurally: the dollar functions inside an "$85 to $105" band, and we're now near the top of it.

The bears don't dispute the near-term strength; they say it's the wrong move to fade. On The Julia La Roche Show, Peter Schiff argued the index "needs to get below 90 before we really start to see a bigger decline," with the 10-year pushing toward 5%. And on Wealthion, Henrik Zeberg laid out the barbell: a dip to ~94 first, then a crisis-driven surge "north of... 120 on the Dixie" as a dollar-short world scrambles for funding.

Is de-dollarization real, or a chart? Operators in the gold trade say the accumulation is real but underreported. On Thoughtful Money, metals dealer Andy Schectman claimed central banks reported buying "15 tons of gold last quarter" while World Gold Council refinery data implied "the real number is 244 tons... This isn't confusion, this is positioning." (Worth flagging: Schectman and fellow gold-market voice Andrew McGuire on Kinesis Money both sell the asset they're talking up, treat the tonnage claims as motivated.) The pushback came from inside JPMorgan: on Eye On The Market, Michael Cembalest said central banks "are getting a markup benefit on their existing holdings, but those allocations aren't really changing much in Troy Ounces' terms," a price effect, not a flight. Johnson splits the difference: "de-dollarization is largely a myth," because trade invoicing and cross-border lending are as dollar-heavy as ever.

The trades in play

  • Short EUR/USD toward 110–113 and long USD/JPY toward 164 in H2, J.P. Morgan's named expressions on At Any Rate.
  • Long the dollar vs. most G10 as a policy-differential trade, Neil Dutta, RenMac Off-Script.
  • Watch the carry trade as the kill-switch, Blockworks' Tyler warned on Forward Guidance that if a rising dollar "starts breaking things elsewhere in the world, you'll get that reverse carry trade." A pundit's framing, but the right thing to monitor.

Read-throughs

  • A quieter Fed means a louder bond market. With Warsh refusing to pre-commit, the front end now does the talking, and a steeper repricing of hikes is the cleanest path to more dollar upside. Watch whether October/September hike pricing holds.
  • Fed–Treasury coordination is the tail risk under the bull case. Johnson on The Wolf Of All Streets: "Besant and Warsh want interest rates lower... you're going to see the Fed and the Treasury work closer together than you have in the past." A genuinely hawkish Warsh and a White House that wants cheap funding into the midterms is an unresolved tension.
  • Watch the Cook case. Chandler noted a pending Supreme Court ruling on whether Trump can fire Governor Cook: if it lands his way, "the president [may] try to fire a couple of other people, including Governor Powell." That's the headline that would put a political-risk discount back into the dollar fast.

What changed

This is the week the dollar narrative inverted. The Street spent two years positioned for a weaker dollar; a new Fed chair and a single hawkish meeting flipped a marquee desk (J.P. Morgan) to bullish, dragged first-hike pricing into Q3, and pushed DXY through resistance it had respected all year. The bear case didn't die, it just got pushed out to "later, and bigger."