Tom Barkin, president of the Federal Reserve Bank of Richmond, said yesterday that last year's interest rate cuts helped to strengthen the labor market and that officials are now focused on bringing inflation back to the central bank's target.

"I think of these cuts as having taken out some insurance to support the labor market as we work to complete the last mile to bring inflation back to target," Barkin said Tuesday at an event in Columbia, South Carolina.

He said the path to that goal will be difficult and thorny, requiring the Fed to exercise surgical precision in its decisions and to be ready to adjust policy quickly. Markets have lately been parsing every word from Fed officials for clues about future actions.

Barkin emphasized that the Fed follows a data?dependent approach, meaning decisions will be based on incoming economic data. That implies traders must be prepared for possible surprises and market volatility, since the interest?rate path will depend on inflation and employment dynamics.

Moreover, many economists question the 2% inflation target. Some argue that, given structural changes in the economy and global trends, a more flexible approach to inflation targeting would be appropriate. The Fed, however, continues to adhere to its stated goal, a stance that has created tension in markets.

Barkin said economic prospects are improving as uncertainty recedes, but risks remain because hiring is concentrated in a few sectors and inflation still exceeds the Fed's 2% target.

Recall that the Fed left the policy rate unchanged last week at a target range of 3.50%–3.75%. Chair Jerome Powell said policy is well-positioned to respond to risks to employment and inflation after officials cut rates three times last year.

In concluding his remarks, Barkin noted that the uncertainty created by tariffs and other policy shifts last year is gradually fading in 2026. He said firms he has spoken with report steady demand. Barkin also expects tax relief, lower gasoline prices, and a somewhat easier monetary stance to support the economy this year.

A technical outlook for EUR/USD suggests that buyers should consider reclaiming 1.1870. That would open the way to test 1.1910. From there, a move to 1.1950 is possible, although advancing beyond that without support from major players would be difficult. The extended target is the high at 1.1980. On a decline, meaningful buying interest is likely near 1.1825. If buyers do not appear there, it would be prudent to wait for a new low at 1.1780 or to open long positions from 1.1730.

As for GBP/USD, buyers of the pound sterling should capture the nearest resistance at 1.3735. Only that will allow them to target 1.3784, above which a breakout would be challenging. The extended target is around 1.3810. If the pair falls, bears will try to seize control at 1.3680. If they succeed, a break of that range would deal a serious blow to bullish positions and could push GBP/USD down to 1.3650 with scope to extend to 1.3615.