United States FX Today: The US Dollar between dissension at the Fed and an avalanche of speeches

The US Dollar (USD) is up on Friday, with the US Dollar Index (DXY) trading at 97.74, up 0.4% on the session. The rebound from Wednesday's Federal Reserve (Fed) meeting is continuing.

The Fed lowered its key interest rate by 25 basis points (bps) to a range of 4.00% to 4.25%, its first cut since December 2024.

But more than the decision itself, market attention is now focused on the statements expected from more than a dozen Fed officials next week, including Chair Jerome Powell on Tuesday.

The media "blackout" to which members are bound before each meeting ended on Thursday, paving the way for a new phase of monetary communication with crucial stakes for the markets.

In particular, this series of speeches promises to be decisive in shedding light on a deeply divided Federal Open Market Committee (FOMC), as evidenced by divergent economic projections and the dissenting vote of the new Governor Stephen Miran.

A divided Fed: One vote, several interpretations of the economy

Wednesday's decision was adopted by 11 votes to 1, but this near-unanimity does little to mask internal fractures. Governor Stephen Miran, newly appointed by US President Donald Trump, voted for a more aggressive 50 basis points cut.

His stance is all the more striking because, as Neil Irwin points out in Axios, it illustrates a desire to "reprogram the Fed according to presidential preferences", in favor of lower interest rates and broader use of monetary policy tools.

According to Michael Pearce, economist at Oxford Economics, this decision "was not a surprise", but the dot plot published in parallel reveals a "deep division over the desirability of further rate cuts this year", reports Investopedia.

Nine members anticipate two further cuts, six wish to remain on pause, while one, most likely Miran, envisages a total cut of 125 basis points in 2025.

The plurality of scenarios in the dot plot for 2026 (some forecasting only 1 cut, others up to 4) also reflects the extent of disagreement on the medium-term trajectory of interest rates. 

According to Seema Shah of Principal Asset Management, quoted by CNBC, this "mosaic of outlooks reflects an uncertain economic future, disrupted by migration policy, data revisions and the political climate".

Fed Chair Jerome Powell, in a press conference, tried to put these divergences into perspective: "It's not surprising to have such a wide range of opinions in such an unusual situation", he said, stressing that monetary policy now had to be assessed "meeting by meeting".

Next week: A choir of voices and an expected conductor

With the end of the blackout on Thursday, the Fed enters a phase of textual explanation. Starting on Monday, five members are scheduled to speak, starting with New York Fed President John Williams at 13:45 GMT.

They will be followed by Michelle Bowman (Tuesday, Thursday, and Friday), Raphael Bostic, Lorie Logan, Austan Goolsbee, and above all, Jerome Powell, whose speech on Tuesday at 16:35 GMT will be closely scrutinized.

Post-meeting speeches are often more revealing than official statements. As the study by Eric Swanson of the University of California reminds us, "the Fed Chairman's speeches move markets more than the decisions themselves", especially in a phase of uncertainty.

Powell's words will carry all the more weight as his succession looms on the horizon in May 2026. In the meantime, markets are hoping for a clearer picture of the likelihood of cuts in October and December, while markets, according to the CME's FedWatch Tool, are still expecting two more cuts this year.

The week ahead could therefore reshape perceptions of the Fed's monetary calendar. Miran's dissent marked a political turning point, but the majority of the FOMC remains aligned on a gradual approach.

The key will lie in how the various officials justify their reading of the risks, between a slowdown in employment and resilient inflation.

"There is no risk-free path", Powell reminded us on Wednesday. With just a few weeks to go before the next meeting, it's not so much September's decision as next week's polyphony that could set the tone and weigh on the US Dollar's fortunes in the weeks ahead.

Technical analysis of DXY: The US Dollar tests a key resistance

US Dollar Index 4-hour chart. Source: FXStreet.

The US Dollar Index continues to climb on Friday, extending the bullish impetus given by Wednesday's Fed meeting.

As a result, the DXY is now approaching a key short-term confluence resistance zone at 97.67, where the upper boundary of the bearish channel and the 100-period Simple Moving Average, visible on the 4-hour chart, are located.

A significant breakthrough of this level could reinforce the short-term bullish bias, with potential targets at 98.00, 98.65 and 99.00.

Conversely, if resistance curbs the upward movement, the US Dollar Index could correct downwards within its bearish channel, with a possible return to the recent low at 96.22.