Dollar Stagnates, Markets Caution Ahead of Fed Decision
The US dollar index moved sideways on Wednesday (December 10th), with market participants opting for caution ahead of the Federal Reserve's interest rate decision, which will be announced tomorrow evening US time. Global investors refrained from aggressive positions due to uncertainty over whether the central bank will deliver a dovish 25 basis point interest rate cut or a hawkish cut, tempering expectations of further easing. This uncertainty has kept the dollar within a narrow range while awaiting a clearer monetary policy direction from Chair Jerome Powell.
The movement in US government bond yields has added to market uncertainty. The 10-year and 2-year yields have fluctuated, reflecting a tug-of-war between expectations of a rate cut and concerns that inflationary pressures remain strong enough to keep the Fed cautious. Recent economic data, including PCE inflation and labor costs, have provided mixed signals, further increasing market focus on the Fed's communication in its official statement and Powell's press conference.
Technically, the dollar index is in a consolidation pattern with strong resistance in the 99.30–100.50 range, a level seen as a bellwether for further rallying if the Fed sends a hawkish signal. Meanwhile, immediate support lies at 97.60–96.40, which could potentially be tested if the Fed strikes a dovish tone, opening the door to further rate cuts in the coming months. Analysts predict sharp volatility will likely emerge following the decision, especially as trading liquidity tends to be thin ahead of major events like the FOMC.
With global markets awaiting clarity on policy direction, the dollar index is expected to remain limited until the Fed's decision is announced. Investors are now bracing for one of the most sensitive sessions for the foreign exchange market this quarter, where a single statement from Powell could determine whether the dollar strengthens again or weakens further.
Source : Newsmaker.id
