FX.co ★ Dollar Holds Firm as Fed Outlook Weighed

The dollar index remained above 97 on Thursday, following a significant rebound in the previous session, as investors reevaluated the Federal Reserve's policy direction. On Wednesday, the Fed announced a widely anticipated quarter-point interest rate cut, while indicating the likelihood of two additional cuts this year but only forecasting one for 2026. This stance challenged market expectations, which had anticipated two or three cuts next year. Fed Chair Jerome Powell adopted a cautious approach, describing the rate reduction as a "risk management" measure in response to labor market weaknesses, while emphasizing that there was no urgency to implement further easing. Notably, newly appointed Governor Stephen Miran was the only dissenter, advocating for a more substantial 50 basis point cut, leading to fewer disagreements than predicted. In other news, the Bank of Canada also reduced interest rates by 25 basis points, while both the Bank of England and the Bank of Japan are anticipated to maintain their current policies this week.