US Dollar Index Rises as Fed Turns Less Dovish
The US Dollar Index (DXY) moved higher on Friday, trading close to 97.40 in the European session. The rise came after the Federal Reserve gave signals that it may not cut rates as quickly as many traders expected.
This week, the Fed cut interest rates by 25 basis points. The move was already expected by the market. But what surprised investors was Fed Chair Jerome Powell’s careful tone. He said the cut was mostly because of a weaker US jobs market, not because the Fed wants to start an aggressive easing cycle.
Powell also warned that tariffs could push inflation higher. He repeated that the Fed will decide on future rate cuts one meeting at a time. This made traders believe the Fed will be more cautious, which gave support to the US dollar in the forex market.
Another event also caught attention. The US Supreme Court received a request from President Trump to overturn rulings that stopped him from firing Fed Governor Lisa Cook. This raised concerns about the independence of the Fed, which could affect how global investors see the dollar.
Impact:
The US dollar might stay strong if the Fed continues its cautious approach. But worries over Fed independence could create more volatility in the forex market.
