By Frank Walbaum, Market Analyst at Naga
The US dollar was relatively stable, with the Dollar Index hovering near the 99-point level. The currency could continue to consolidate as traders could remain cautious ahead of the Federal Reserve meeting, while they await the central bank’s monetary policy decision.
The market could remain exposed to downside risks as interest cut expectations remain high. Futures markets now assign roughly an 87% probability that the Fed could deliver a 25 bps cut at this week’s meeting, as well as additional cuts in 2026.
However, Fed Chair Jerome Powell’s press conference and accompanying statement could be critical and could affect sentiment. Over the near term, the dollar’s direction could hinge on the tone of the Fed Chair and the economic projections of the central bank. A clearly dovish message could push the dollar to the downside, extending its downtrend, while a cautious stance or resistance to further easing could spark a corrective bounce in the greenback.