The US dollar rose on Wednesday as investors waited to see whether Federal Reserve Chair Jerome Powell would back market expectations for a dovish policy path at his press conference later in the day.
The dollar fell to a four-year low against the euro on Tuesday, as investors turned their attention to the Federal Reserve’s policy meeting, where a 25-basis-point rate cut is widely expected.
Markets are pricing in 68 basis points of Fed easing moves by year-end and a total of 147 bps by the end of 2026.
The spotlight will also be on whether policymakers considered a bigger 50 bps cut at a time when President Donald Trump pushes ahead with efforts to overhaul a pillar of the US economy, stoking concerns about the central bank’s independence.
The euro eased by 0.25 percent to $1.1838, after hitting a four-year high of $1.18785 on Tuesday.
Sterling dropped 0.13 percent to $1.3630, not far from 2-1/2-month highs after British inflation data matched expectations.
“Jay Powell will offer balance. He’ll highlight again the downside risk to employment growth, but refrain from signaling a long string of cuts after September,” said Thierry Wizman, global forex and rates strategist at Macquarie Group.
“That could rally the dollar, hurt gold, and cause a tremor tomorrow in the tectonic drift higher in tech stocks,” he added.
