You can't go it alone. Kevin Warsh learned that from experience: the Federal Reserve chair may want rate cuts, but the Board of Governors doesn't have to follow him. "He has a board of governors that may be a bit hostile," admitted Donald Trump, usually generous with praise for his protege.

The president's remarks coincided with a new split among currency strategists: some say the US dollar is overbought; others see it as the main asset of the second half of the year. Credit Agricole, Morgan Stanley, TD Securities, and Eurizon SLJ Capital stand apart from the consensus. In their view, speculators have squeezed everything they could out of the greenback's rally: long positions in the greenback are the most extreme in a year and a half.

Dynamics of speculative positions in the US dollar

"The dollar looks overbought and overvalued, and the Fed may not be as 'hawkish' as rate markets expect," Credit Agricole notes. However, most banks see it differently. JPMorgan, Bank of America, Goldman Sachs, and HSBC continue to bet on dollar strength, and HSBC called a wager against the greenback one of the biggest mistakes of the second half of the year.

In reality, the dispute is less about fundamentals than about how much of the upside is already priced in. Skeptics do not deny the dollar's strength — they believe the market has already priced it in while the Fed prepares to pause.

Employment statistics add fuel to the fire. The US economy added just 57,000 jobs in May versus 115,000 expected, while unemployment fell to 4.2% — but only because the labor force shrank, not due to hiring. The six?month average of 92,000 is still close to the best levels in two years, so Fed hawks and doves read the same numbers in very different ways.

Meanwhile, the White House is stepping up pressure on the central bank's independence. The Supreme Court allowed Lisa Cook to remain on the Board of Governors despite Trump's attempts to remove her. Besides, adviser Kevin Hassett criticized Jerome Powell for his unwillingness to leave the Federal Reserve.

The euro is watching the circus from the sidelines and is in no hurry to celebrate. The ECB?Fed interest rate differential still favors the dollar, and weak eurozone data give the single European currency no independent levers. EUR/USD is rising not because of its own strength but on doubts about the greenback.

For EUR/USD, all this discord means one thing: while Washington fights among itself, the currency pair cannot rely on either unequivocally "hawkish" or "dovish" rhetoric. Will the dollar's decline resume in the second half of the year?

Technically, on the daily chart, EUR/USD is retracing a 1?2?3 reversal pattern. Long positions opened from 1.1375 make sense to add to if the pair successfully breaches the pivot resistance at 1.1475. Target levels are 1.1540 and 1.1620 — the first of which represents fair value.