EUR/USD Forecast: Euro drifts lower with Warsh emerging as the next Fed Chair

The Euro posts moderate losses on Friday, trading at 1.1920 at the time of writing, as the US Dollar picks up amid speculation that Warsh will be the next Federal Reserve (Fed) Chairman and hopes that the government shutdown can be avoided.

US President Donald Trump said on Thursday that he will announce the name of Jerome Powell’s replacement at the Fed, and media outlets are pointing to former Fed governor Kevin Warsh as the best positioned for the job. Investors have shown some relief in the conviction that Warsh will be able to guarantee the central bank’s independence rather than acting on Trump’s orders.

Beyond that, news that US Senate Democrats and Republicans have reached an agreement on a package of spending bills has boosted hopes that another government shutdown can be averted, providing additional support for the Greenback.

US data released on Thursday was mixed. Factory Orders bounced up beyond forecasts, but Initial Jobless Claims were also higher than expected, and the trade deficit widened. On Friday, the focus will be on the Q4 Eurozone Gross Domestic Product (GDP) and the German Harmonised Index of Consumer Prices (HICP). In the US session, December’s Producer Prices Index (PPI) will attract attention.