FX.co ★ Dollar Holds Steady as Traders Weigh Fed Outlook

The dollar index remained steady at approximately 98.8 on Wednesday, maintaining a sideways trend for the week as investors evaluated the Federal Reserve's policy direction amid mixed economic signals and renewed trade tensions. Recent data from the Institute for Supply Management (ISM) indicated that US services activity almost came to a halt in July, falling short of market expectations and highlighting the economic impact of President Donald Trump's tariffs. Concurrently, Trump announced plans to nominate a candidate for the Federal Reserve Board of Governors vacancy by the week's end, while refining the shortlist for potential successors to Chair Jerome Powell. The markets have factored in over a 90% likelihood of a Federal Reserve rate cut in September, with expectations for reductions totaling about 60 basis points by the end of the year. On the trade front, Trump has issued threats to impose tariffs of up to 250% on pharmaceutical imports, as well as possible tariffs on semiconductors.