Morgan Stanley's currency strategists, led by David Adams, warn that the upcoming policy meeting of Federal Reserve Chairman Kevin Warsh could trigger significant volatility in foreign-exchange markets, particularly affecting the euro, yen, and Australian and New Zealand dollars. Despite the dollar's stability this year amidst rising oil prices and tumbling global bonds, the analysts believe Warsh's approach could disrupt current market narratives and lead to new trends. They note that one-month implied volatility for the euro-dollar pair has recently dropped to its lowest since January, while the yen's volatility is at its lowest since 2022. A hawkish signal from Warsh or changes in the Fed's dot-plot estimates could lead traders to unwind carry positions, heightening market fluctuations. Conversely, if the Fed suggests a lower rate trajectory, it could also impact the dollar's performance. Warsh's leadership style, which favors reduced public communication, may further contribute to market unpredictability, according to analysts from UniCredit SpA, who echo Morgan Stanley's concerns about increased volatility under his tenure.