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Key Takeaways:
*Fed holds rates unchanged at 4.25% – 4.50%, citing rising uncertainty from tariffs and trade policy.
*Powell’s cautious tone underscores a data-dependent path forward, dampening market volatility.
*Dollar Index rebounds, but technical indicators warn of potential correction ahead.
Fed Keeps Rates on Hold, Highlights Uncertainty
The overall market sentiment during yesterday’s session and early Asian trading hours was largely shaped by the Federal Reserve’s latest monetary policy decision. As widely expected, the Federal Open Market Committee (FOMC) voted unanimously to keep the benchmark federal funds rate unchanged at 4.25%–4.50%.
However, what caught investor attention was Fed Chair Jerome Powell’s cautious tone. He reiterated that while the U.S. economy remains resilient, escalating trade tensions and tariffs are injecting uncertainty into the outlook for inflation and employment. Powell emphasized that the Fed is in no rush to adjust interest rates, preferring to await clearer signals from incoming data before shifting policy direction.
Market Reaction Remains Muted
Given that a rate hold was already priced in, global market reaction was subdued. The Nasdaq index edged up modestly, gaining 0.27% to close around 17,738.16, as investors digested Powell’s comments with a wait-and-see attitude.
On the FX front, the U.S. Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, rebounded slightly in response to the Fed’s decision. Meanwhile, gold prices retreated, weighed down by dollar strength and reduced demand for safe-haven assets in the absence of a dovish Fed surprise.
📈 Dollar Index Technical Outlook
From a technical perspective, the Dollar Index (DXY) is currently trading higher after rebounding from its moving average (MA) support line. However, the index is now testing a consolidation resistance level at 100.05, a key area to watch for potential breakout confirmation.
Resistance level: 100.05, 102.65
Support level: 99.20, 98.50
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