US Dollar Index (DXY) holds previous gains above 99.00 ahead of the Fed

The USD Index remains above 99.00, and keeps a frail weekly recovery with all eyes on the Fed.
The US central bank is expected to cut rates for the third consecutive meeting and signal a pause.
Investors will watch the "dot plot" to confirm their views of two to three further rate cuts in 2026.

Guillermo Alcala FXStreet

The US Dollar Index (DXY)is trading practically flat on the daily chart, following a rejection at the 99.30 area on Tuesday, with downside attempts contained above the 99.00 line, as investors bid their time awaiting the outcome of the Federal Reserve meeting, due on Wednesday, at 19:00 GMT.

The DXY, which measures the value of the greenback against a basket of six currencies, is facing mild bearish pressure as traders square trim their USD long positions ahead of the Fed’s decision, although the strong US Treasury yields keep underpinning a mild recovery in the first half of the week.

The Fed might deliver a hawkish cut on Wednesday

The market practically discounts a 25-basis-points rate cut, and therefore the main focus will be on Chairman Powell’s press release and on the committee’s interest rate projections, the so-called “dop-plot”. Investors will be eager to know if the consensus of two to three rate cuts for 2026 is realistic.

Recent US data revealed that employment demand increased after the summer, which has eased concerns about the labour market. JOLTS Job openings data showed an increase to rose to 7.658 million in September and to 7.67 million in October, from 7.227 million in August, beating market expectations of a slight decline to 7.2 million.
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These figures, coupled with the sticky inflation levels shown by the US PCE Price Index data last week, endorse the postulates of the Fed’s hawkish party and pave the path for Chairman Powell to raise the bar for further monetary policy easing.

US President Donald Trump, did not leave the opportunity of putting some pressure on the bank and called for sharply lower interest rates in an interview with Publico on Tuesday, calling Powell names for not lowering borrowing costs fast enough.

(This story was corrected on December 10 at 10:55 GMT to say that Wednesday's will be the third consecutive Fed rate cut, and not the second.)

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

Economic Indicator

Interest Rate Projections - 1st year

At four of its eight scheduled meetings, the Federal Reserve (Fed) releases a Summary of Economic Projections, or ‘dot-plot’. This shows each member of the Federal Open Market Committee’s (FOMC) forecast for where they expect the federal funds rate (the interest rate at which banks lend to each other) will go in the future. It can have a major impact on the US Dollar (USD), particularly if members change their forecasts. It is widely used as a guide to figure out the terminal rate and the possible timing of a policy pivot.

EUR/USD climbs above 1.1600 on US–Iran peace breakthrough

The EUR/USD pair gains traction to near 1.1610 during the early European trading hours on Monday. The reports that the US and Iran have reached a deal to reopen the Strait of Hormuz improved risk sentiment, supporting the Euro against the US Dollar. The US Federal Reserve interest rate decision will be in the spotlight later on Wednesday.

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Bitcoin consolidates gains, Ethereum defends support, XRP nears breakout trigger

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President Trump announced that the deal with Iran is complete

President Trump announced that the deal with Iran is complete and he authorises the toll-free opening of the Strait of Hormuz and removal of the US Naval blockade. While the agreement is made, it is expected to be signed on Friday to take effect. The Forex market looks stable and could react slowly to the positivity around the news as Iran still expresses its mistrust on the US.

4.2% headline, 0.2% core: Why the Fed's next hike may be targeting the wrong problem

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