The US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, is trading around 98.80 during Wednesday’s Asian session, snapping a four-day winning streak. Investors are exercising caution ahead of the US Federal Reserve’s (Fed) interest rate decision later in the North American session.
Markets widely expect the Fed to keep its benchmark interest rate unchanged within the 4.25% to 4.50% range for July. According to the CME FedWatch Tool, there is a 97% probability of no change in rates.
Attention now turns to the FOMC press conference, where traders will watch for any forward guidance on potential rate cuts starting as early as September. Additionally, key economic data due this week—including the Q2 Personal Consumption Expenditures (PCE) inflation report and July’s Nonfarm Payrolls—will help shape the outlook for Fed policy going forward.
Political dynamics are also in focus. US President Donald Trump has repeatedly criticized Fed Chair Jerome Powell, raising concerns about the central bank’s independence. Although there had been speculation that Trump might seek Powell’s removal, recent reports suggest he has stepped back from such a move—for now.
Meanwhile, trade tensions linger. US-China talks held in Stockholm on Tuesday ended without an agreement to extend the current tariff truce. US Treasury Secretary Scott Bessent confirmed that discussions will continue over the coming days. With the deadline just two weeks away, any final decision on an extension will rest with President Trump.
