FX.co ★ Dollar Rebounds as Traders Assess FOMC, Chair Powell Comments

The dollar index experienced an initial decline to its lowest point since 2022 before rebounding to trade at a higher level of 96.8 on Wednesday. This shift occurred as traders processed the latest decision from the Federal Open Market Committee (FOMC). In line with expectations, the Federal Reserve reduced the federal funds rate by 25 basis points, marking the first cut in borrowing costs this year. The Fed also indicated plans for an additional 50 basis points reduction by the year’s end, slightly surpassing projections made in June. During a press conference, Chair Powell highlighted that the risks of increased and persistent inflation have diminished since April. He characterized the current rate cut as a 'risk management' measure rather than the initiation of a new easing cycle. Meanwhile, newly appointed Governor Stephen Miran was the sole official to advocate for a larger cut of 50 basis points, leading to fewer dissentions than the market had predicted.