The U.S. dollar held steady, with volatility expected to increase ahead of this week’s key US economic events.
The Federal Reserve’s interest rate decision on Wednesday will take centre stage, with a widely anticipated 25-basis-point cut. However, market participants will closely monitor 2025 projections, which could influence the dollar’s trajectory.
While a hawkish tone might propel the greenback to multi-month highs, a dovish stance should place downward pressure on the currency.
U.S. Treasury yields stabilized and could also react strongly to the Fed’s press conference. 10-year US Treasury yields hovered under 4.4% at the beginning of the week and could support the dollar if they rise.
Beyond the Fed, key U.S. economic data, including Q3 GDP growth, retail sales and core PCE, as well as European indicators such as the ZEW index and consumer confidence, are likely to add to market complexity. Meanwhile, the Bank of England and the Bank of Japan are expected to announce their rate decisions this week. While both are likely to maintain current rates, speculation about an imminent rate hike from the Bank of Japan could limit near-term gains for the dollar.
