The main candidate for the position of Federal Reserve Chair next year, Governor Christopher Waller, has sharply changed his stance — a move that has inevitably impacted the currency market.

Waller, who is on the administration's short list for the Fed chairmanship, may have felt pressured to act similarly to Stephen Miran, a close ally of President Donald Trump, who is advocating for a radical interest rate cut. By doing so, Waller is effectively building a solid foundation for potential support from the White House administration.

However, such a maneuver carries certain risks. On one hand, loyalty to the White House could strengthen his chances of securing the coveted position. On the other hand, a sudden policy reversal could erode trust among other Fed members and financial markets, which have long viewed him as a more conservative and predictable policymaker.

The influence of political pressure on Fed decisions remains a topic of heated debate. The independence of the central bank is a cornerstone of economic stability, and any attempts at political interference could undermine confidence in the national currency and trigger serious economic turmoil. As an experienced economist, Waller fully understands this delicate balance and must act with extreme caution so as not to jeopardize the stability of the financial system in pursuit of personal ambition.

Waller had been advocating for renewed rate cuts by the Fed for months, and some of his colleagues had viewed this stance with skepticism. However, as recently as last week, he indicated that a quarter-point cut would be sufficient. Now, as we can see, everything has changed.

"We all understand that we'll have to find a certain compromise in our positions to ensure a clear and consistent policy for both the markets and the American people," Waller said at an event in New York.

It's worth recalling that Trump is not merely reviewing candidates for the next Fed chairmanship — he is conducting a broader campaign to increase control over the Fed, seeking to minimize political influence on interest rate decisions. In addition to demanding lower borrowing costs, Trump and his allies want the Fed to critically evaluate itself and possibly carry out major institutional reforms. Since Waller has become one of the leading contenders to replace Jerome Powell when his term ends in May of next year, his stance on these issues is being closely scrutinized from all sides.

Waller's current political outlook implies further rate cuts, and his vocal support for this idea has led some to suspect that he is positioning himself strategically for the chairmanship. Throughout the year, Waller argued that Trump's tariffs would result in a one-time increase in prices. When it came to recognizing weaknesses in the labor market, Waller was among the first to speak up. In June, he pointed to growing signs of instability and became the first policymaker to publicly call for a resumption of Fed rate cuts. At the July monetary policy meeting, he dissented from the majority decision to leave rates unchanged.

This is not the first time Waller has held an opposing viewpoint and continued to defend it despite his colleagues' skepticism. Back in 2022, he was criticized for saying that the Fed could tame inflation without sharply increasing unemployment.

In any case, the softer the Fed's rhetoric, the greater the pressure on the US dollar.

Technical Outlook for EUR/USD

Buyers now need to focus on reclaiming the 1.1620 level. Only a breakout above this mark will allow for a test of 1.1650. From there, the pair could climb toward 1.1700, although doing so without support from major market players will be challenging. The ultimate upward target would be 1.1725.

In the event of a decline, significant buying interest is expected to emerge around 1.1590. If large buyers fail to appear there, it would be prudent to wait for a renewal of the 1.1545 low or to consider long positions from 1.1500.

Technical Outlook for GBP/USD

For pound buyers, the key objective is to break above immediate resistance at 1.3360. Only this will open the way toward 1.3385, although surpassing this level may prove difficult. The ultimate upward target is near 1.3420.

In case of a decline, bears will attempt to regain control around 1.3320. If successful, a break below this range would deal a serious blow to bullish positions and push GBP/USD down toward 1.3280, with the potential to extend to 1.3250.