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Fed Holds Rates Steady, Signals Two Cuts in 2025
The Federal Reserve kept its benchmark interest rate at 4.25%-4.50% and reiterated its forecast for two quarter-point rate cuts in 2025. Policymakers acknowledged slowing economic growth and persistent inflation, fueling speculation about monetary easing. Powell emphasized that while the labor market remains strong, inflation remains elevated, requiring careful monitoring.
Market participants are pricing in 66 basis points of easing this year, with a July rate cut fully expected, according to LSEG data. Powell’s measured stance suggests the Fed is waiting for clearer economic signals before adjusting policy, adding to investor uncertainty.
The prospect of rate cuts weakens the dollar, as lower yields reduce its appeal, prompting capital flows into alternative assets.
Geopolitical Tensions and Policy Moves Impact the Dollar
Geopolitical developments also continue to influence USD performance. Former President Donald Trump and Russian President Vladimir Putin agreed to a 30-day pause on strikes targeting Ukraine’s energy infrastructure, but Putin rejected a broader ceasefire, signaling continued tensions.
Meanwhile, Trump reaffirmed his plan to impose new tariffs on April 2, targeting steel, aluminum, and autos without exemptions. Additionally, his proposal to increase fees on China-linked vessels entering US ports is already disrupting the coal and agriculture sectors, adding to economic uncertainty.
US Dollar Index (DXY) – Technical Analysis
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