By Joseph Dahrieh, Managing Principal at Tickmill
The dollar held steady on Tuesday as investors positioned ahead of the Federal Reserve’s policy announcement and Chair Jerome Powell’s highly anticipated remarks on Wednesday.
Markets assign nearly a 90% probability to a rate cut this week, while expectations for 2026 point to two additional reductions. Any signal from Powell that the Committee is leaning toward a more dovish policy path could weigh on both the dollar and long-term yields.
Beyond the rate decision, traders will scrutinise the updated FOMC Economic Projections, which could set the tone for the dollar’s trajectory. Adjustments to growth, inflation, or the projected policy rate path may trigger significant repricing across forex and bond markets.
In the meantime, investors will also monitor today’s JOLTS report and ADP Employment Change Weekly, all of which could help refine expectations for the Fed’s next steps.