The US Dollar Index (DXY), which tracks the greenback’s performance against a basket of six major currencies, remains under pressure near 96.70 as investors strengthen their expectations for a Federal Reserve (Fed) rate cut later on Wednesday.
Markets widely anticipate a 25-basis point (bps) cut at the Fed’s September meeting, following signs of cooling in the US labour market. According to the CME Fed Watch Tool, traders are pricing in nearly a 100% probability of a quarter-point cut, while a small minority continues to speculate on the chance of a larger, half-point reduction.
Attention now turns to Fed Chair Jerome Powell’s press conference and the release of the Summary of Economic Projections (SEP), or ‘dot-plot,’ which could provide crucial guidance on the future trajectory of US interest rates. “The dollar is trading with a heavy tone across the board as investors brace for a dovish message in Wednesday’s voting record, dot plot, and press conference,” noted Karl Schamotta, Chief Market Strategist at Corpay.
