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Published: 29 October 2026,10:48
Daily Market Analysis New
*The Fed held interest rates at 3.75%–4.00%, as expected, but Chair Kevin Warsh’s cautious tone was viewed as slightly more dovish.
*Upcoming US GDP and PCE inflation readings will shape expectations for the December meeting. Persistent inflation could revive rate-hike expectations and support the dollar.
*The dollar faces competing forces from shifting Fed expectations, geopolitical developments, and other major central banks’ policy paths. Until clearer signals emerge, the currency is likely to remain vulnerable to volatility.
The US dollar weakened following the Federal Reserve’s decision yesterday to hold the federal funds rate steady in the 3.75 to 4.00 percent range. The outcome aligned with market expectations, yet the subsequent comments from Chair Kevin Warsh were interpreted as modestly more dovish than anticipated. While Warsh reaffirmed the Committee’s commitment to the 2 percent inflation target and noted that inflation remains elevated, his emphasis on gathering additional information before determining the appropriate policy stance reduced near-term conviction around further tightening. Two members dissented in favor of an immediate hike, underscoring internal debate, but the overall messaging left markets viewing the Fed as slightly less aggressive than previously priced.
This shift in perception exerted downside pressure on the currency, with the dollar index retreating from session highs as short-term rate expectations adjusted. The decision to pause after the September increase, combined with the measured tone in the press conference, contributed to a steeper yield curve and softer dollar performance against several major counterparts.
Looking ahead, the dollar’s near-term trajectory will depend on incoming economic data, particularly the forthcoming GDP and PCE readings, which will shape expectations for the December meeting. Markets continue to assign a meaningful probability to another rate increase before year-end, providing a potential floor for the currency if data reaffirm persistent inflation pressures. However, any further signs of cooling price pressures or continued cautious language from Fed officials could extend the recent softening. Geopolitical developments and relative policy paths at other major central banks will also influence flows, leaving the dollar vulnerable to two-way volatility in the sessions ahead until clearer signals on the policy path emerge.
Technical Analysis
DXY, H4:
The US Dollar Index has maintained its long-term uptrend, with recent price action suggesting that the technical retracement may have ended following a breakout above its short-term descending channel. However, the index is currently facing rejection at resistance, making the ability to establish support above 101.90 a key factor in determining its next move.
Should the index hold above the 101.90 support level, the broader bullish trajectory would remain intact, potentially paving the way for a further advance toward its previous peak at 102.90. Conversely, a decisive break below 101.90 could weaken the bullish outlook and expose the index to renewed downside pressure.
Resistance Levels:102.40, 103.50
Support Levels:101.40, 100.50
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