Danske Research reviews yesterday's April FOMC meeting.

"Powell announced that he will continue as a Fed Governor past his term as a Chair but did not specify for how long. This is hawkish on the margin, as it blocks Trump from nominating a potentially more dovish replacement, and means that Miran (who was the only dissenter in favour of a cut) will not continue as a Governor in June. Markets erased bets for further rate cuts and instead priced in a 40-50% probability for a rate hike during H1 2027. We maintain our relatively more dovish call with two cuts in Sep and Dec," Danske notes.

"We doubt that a more pronounced shift to the downside in EUR/USD will be triggered by hawkish Fed pricing alone. Instead, if risky assets begin to weaken more significantly as oil prices rise further, broad USD could benefit from renewed demand as a portfolio diversifier," Danske adds.