As the week concludes, risk-sensitive financial assets have remained supported by growing expectations of an upcoming interest rate reduction from the U.S. Federal Reserve. Despite minor fluctuations, the American dollar showed only a slight decline on Friday, maintaining its position within the recent trading boundaries when measured against other key global currencies. Attention in the coming days will center on the central bank’s policy announcement, particularly the FOMC’s stance on rates and its economic forecasts, which could significantly influence market direction.
Market sentiment has been shaped by anticipation surrounding potential monetary easing. A more accommodative signal from the Fed—either through an actual rate cut or forward guidance suggesting future reductions—could propel U.S. stock indices to new record levels. Conversely, any indication of a tighter-than-expected policy approach might limit further gains in equities.
Technically, the Dollar Index (DXY) finds immediate support at 98.58, aligned with its 100-day moving average. Should the Fed adopt a dovish tone, the index may test levels near 98.00 or even 97.70. On the upside, resistance remains at 99.51, corresponding to the 200-day moving average. Additionally, changes in the composition of the Fed’s voting members or leadership dynamics could reshape current assumptions about the pace and timing of rate cuts, potentially leading to a reassessment of market expectations extending into 2026.
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Markets Weekly Outlook – FOMC Rate Cut Countdown, Economic Projections May Hold The Key
The week draws to a close with risk assets largely buoyed by the prospect of an interest rate cut from the Federal Reserve.
The US dollar was slightly weaker on Friday but generally stayed within its recent trading range against other major currencies.
The week ahead will see market focus on the Federal Reserve rate decision.
By Zain Vawda
Week in review: Markets Buoyed Ahead of FOMC Meeting
The week draws to a close with risk assets largely buoyed by the prospect of an interest rate cut from the Federal Reserve.
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Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
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Quick Insights
A dovish Fed rate cut or guidance could catalyze fresh all-time highs in US equities, while a hawkish surprise may cap upside momentum.
Immediate support is at 98.58 (100-day MA); a dovish Fed could push DXY toward 98.00 or 97.70, while resistance sits at 99.51 (200-day MA).
Potential shifts in the Fed’s voting committee and Chair could alter rate cut projections, making current market pricing for 2026 subject to significant revision.
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