|

US Dollar Index (DXY) recovers to 96.00 amid some repositioning ahead of Fed decision

  • The USD rebounds from a four-year low as bears lighten their bets ahead of the FOMC decision.
  • Traders will look for cues about the Fed’s rate-cut path before positioning for the next leg down.
  • Renewed Fed independence worries and uncertainty over Trump's decisions might cap the buck.

The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, attracts some buyers during the Asian session on Wednesday and reverses a part of the overnight slump to the lowest level since February 2022. The index retakes the 96.00 mark in the last hour, though the fundamental backdrop warrants some caution before positioning for any meaningful appreciation ahead of the key central bank event.

The US Federal Reserve (Fed) is scheduled to announce its decision later today and is expected to keep interest rates unchanged at the end of a two-day meeting. The focus, meanwhile, will be on the post-meeting press conference, where comments from Fed Chair Jerome Powell will be scrutinized closely for cues about the policy path amid bets for at least two more rate cuts in 2026. The outlook, in turn, will play a key role in determining the next leg of a directional move for the US Dollar (USD).

The attempted USD recovery, however, runs the risk of fizzling out quickly as evolving efforts to fire Fed Governor Lisa Cook fuel worries about the central bank's independence. Meanwhile, US President Donald Trump said on Tuesday that he will soon announce his pick to serve as the Fed Chair, and predicted interest rates would decline after the new chair takes over. Adding to this, heightened economic and policy risk linked to Trump's trade and geopolitical decisions should cap the USD gains.

Hence, Wednesday's move up could be attributed to some repositioning trades as bears opt to lighten their bets heading into the highly-anticipated Fed rate decision. Even from a technical perspective, the recent breakdown below the 97.20-97.00 pivotal support was seen as a key trigger for bearish traders and suggests that the path of least resistance for the USD remains to the downside. This, in turn, backs the case for the emergence of fresh selling at higher levels.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.27%0.24%0.31%0.18%0.18%0.46%0.40%
EUR-0.27%-0.04%0.02%-0.10%-0.09%0.18%0.13%
GBP-0.24%0.04%0.06%-0.06%-0.05%0.21%0.16%
JPY-0.31%-0.02%-0.06%-0.13%-0.12%0.14%0.09%
CAD-0.18%0.10%0.06%0.13%0.00%0.27%0.23%
AUD-0.18%0.09%0.05%0.12%-0.01%0.27%0.21%
NZD-0.46%-0.18%-0.21%-0.14%-0.27%-0.27%-0.05%
CHF-0.40%-0.13%-0.16%-0.09%-0.23%-0.21%0.05%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

More from Haresh Menghani
Share:

Editor's Picks

GBP/USD bounces off lows, back above 1.3200

After bottoming out near 1.3160, GBP/USD manages to regain a bit of shine and reclaim the 1.3200 mark and beyond at the end of the week. Stronger-than-expected UK Retail Sales data seem to be helping the British Pound limit its losses, while the chaotic UK political environment keeps the bulls at bay for now.

EUR/USD looks consolidative around 1.1460

EUR/USD stages a modest rebound after slipping to a three-month low below 1.1420 at the end of the week. That said, the pair now looks to consolidate humble gains just above 1.1460 despite growing uncertainty surrounding the next round of US-Iran negotiations, which keeps the US Dollar’s downside contained.

Gold slips back to six-day lows, targets $4,100

Gold retreats for the third consecutive day on Friday, eroding gains seen in the first half of the week and approaching the key $4,100 mark per troy ounce. Indeed, the precious metal continues to face headwinds from the Fed's hawkish stance and renewed uncertainty surrounding the next round of US-Iran negotiations.

Breaking: Iran closes the Strait of Hormuz amid ceasefire deal violation
Iran says it is closing the Strait of Hormuz after accusing the United States (US) and Israel of violating the ceasefire. According to Iran, the decision came over the continued Israeli strikes in Lebanon. The Iranian Revolutionary Guard Corps Navy issued a warning to all vessels: "Do not approach the Strait of Hormuz; otherwise, your security will be jeopardized."
The Iran war didn't break the US economy, but what happens next?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.