DXY: US Dollar Steady Against Rivals as FX Traders Await Key Fed Decision

US currency gauge was floating near 99.00 Wednesday morning. What can a rate cut do about that?

💵 Dollar Holds Firm Before the Fed

• The US dollar index DXY hovered near 99.00 early Wednesday as traders waited for the Fed’s decision – a calm-before-the-storm setup where nobody wants to take a big FX swing.
• Recent gains have somewhat faded as markets brace for a “hawkish cut,” meaning the Fed may lower rates but warn against expecting a full easing cycle.
• Any dollar bounce may be limited since traders have priced in the cut heavily, leaving little room for surprise upside.

📉 Rate Cut Could Add Pressure

• A cut typically weakens the dollar by lowering yields – less return on dollar-denominated assets means fewer investors chasing them. But if Powell talks tough, the downside could be cushioned.
• Still, weak jobs data next week could hit the dollar again, reinforcing the narrative that the US economy is cooling faster than policymakers want to admit.
• Seasonally, December tends to lean bearish for the greenback, adding another layer of pressure on the index’s ability to hold 99.

📊 FX Pairs Watch Key Levels

• The EURUSD hovered near $1.1630, inching lower but still facing overhead resistance until the Fed clarifies direction.
• The GBPUSD slipped toward $1.33 as traders trimmed risk, preferring to stay light heading into the rate call.
• With the US currency gauge parked near its 50-, 100- and 200-day moving averages, the next move could be decisive – today’s Fed message could tell whether the dollar breaks higher or resumes its slide.