US Dollar Index posts modest gains to near 97.50 as Fed appears less dovish
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, trades on a stronger note near 97.40 during the early European session on Friday. The DXY edges higher as the Federal Reserve (Fed) delivered an expected rate cut but signaled little urgency to lower borrowing costs quickly in the coming months.
The Fed reduced rates by 25 basis points (bps) on Wednesday, as widely expected, with Chair Jerome Powell characterizing the day's policy action as a risk-management cut in response to the weakening labor market. Powell further stated that the US central bank did not need to rush easing and emphasized a 'meeting-by-meeting' approach to further cuts.
"Investors judged the Fed's guidance less dovish than anticipated," said MUFG analyst Soojin Kim. "Chair Powell highlighted tariff-driven inflation risks and stressed a 'meeting-by-meeting' approach to further cuts, sending the dollar higher,” Kim added.
CNBC reported that a court blocked US President Donald Trump from replacing Fed Governor Lisa Cook, who was appointed by former President Joe Biden. The White House has accused Cook of mortgage fraud involving government-backed loans for residences she bought, but no charges have been brought. Cook has denied the accusations. The renewed concerns over the Fed’s independence could weigh on the DXY against its rivals.
Source: Fxstreet.com
