The US Dollar traded within a narrow range on Tuesday as investors braced for the Federal Reserve’s interest rate decision.
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.
Beyond monetary policy, growing concerns over global economic growth add to the dollar’s woes.
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.
US Treasury yields lacked clear direction ahead of Powell’s comments, with the 10-year note hovering near 4.3%. Upcoming economic data could place downward pressure on yields if expectations of a softer monetary policy gain traction.
Meanwhile, peace talks between US President Donald Trump and Russian President Vladimir Putin add another layer of complexity. 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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