The US Dollar traded within a narrow range as investors anticipated the Federal Reserve's interest rate decision, with a close watch on Fed Chair Jerome Powell's speech. While expectations lean towards holding rates steady, a dovish tone could weaken the dollar. Concerns about the global economy, driven by poor retail sales and OECD forecasts linked to trade policy, compound the dollar's challenges. US Treasury yields are directionless, pending economic data, and geopolitical factors like peace talks with Russia add complexity to the dollar's outlook.
While markets widely expect the central bank to hold rates steady, market participants will closely monitor Fed Chair Jerome Powell's speech, which could influence sentiment and monetary policy expectations.
A dovish stance should weigh on the greenback, while a more restrictive outlook is likely to provide temporary support for the currency.
Worse-than-expected retail sales, combined with the latest OECD projections of an economic slowdown linked to Trump's trade policies, could further dampen investor confidence.
Positive diplomatic developments could fuel risk-on sentiment and weigh on the US dollar, whereas any setback could benefit the currency.
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