Janet Yellen and the Forex Market

Janet Yellen was nominated yesterday by the White House to replace current Fed Chairman Ben Bernanke when he leaves office in January. Should she be confirmed she would be the first female Fed Chief in the history of the Federal Reserve. Senate Democrats are very confident that she will be approved with a wide majority.

Yellen currently serves as the Vice Chair of the Board of Governors of the Federal Reserve System. In case she will get approved, which at this point seems very likely, she will inherit a great deal of problems which Bernanke started and she has her work cut out for her.
The Federal Reserve has lost credibility and it is evident that while their mandate states they are independent from politics, that they are right in the center of it. Bernanke initiated a series of QE programs which had the Fed print money to buy US Treasuries. This caused the Fed to accumulate well over $2 trillion of debt on its balance sheet with basically no assets.
Any other bank would have been forced by the government to be broken up or file for bankruptcy, but the Federal Reserve continues to do what it claims banks should not do and should not be allowed to do. They have created a double standard not only to practices, but also to regulations.
What does Janet Yellen mean to the forex market?
She is considered to be a dovish FOMC voting member which means that she does not really care too much about inflation and is more concerned with the unemployment rate. Forex traders may cheer her approval as it will certainly ensure that interest rates will not be increased and that QE3 will remain intact as she believes it is a good idea and will eventually assist the US economy.
Yellen admitted that she did not see any of the financial risks in the US system until after the collapse in 2008 and the Great Recession which followed. This raises the question why the White House would want someone like her to be at the top of the Federal Reserve.
Forex traders should expect more of the same mistakes Bernanke has made and potentially prepare their forex portfolios for a long period of stagflation as Yellen clearly does not care about inflation, admitted that she has had not understanding of the US financial system and will continue to print money until the bubble bursts.
Expect the USD to remain weak and continue to deteriorate, but keep in mind that it will not be in one straight line down. This means that volatility should increase which will create trading opportunities. Yellen will quickly lose trust of the financial markets as she will make mistake after mistake as is expected from someone with her background and experience.