Dollar Strengthens; Fed Signals to Be the Deciding Factor

The US Dollar Index rose to 101.9 on Monday (October 26), snapping a two-week losing streak. This gain comes as investors prepare for a week packed with key economic events and a monetary policy decision from the Federal Reserve.

The Fed is widely expected to keep interest rates unchanged at its October meeting. Consequently, market attention will be focused on policy guidance and whether officials provide any signals regarding a potential rate hike in December.

US economic data—specifically GDP growth and the PCE price index—are also in the spotlight. Both indicators could offer clues about the state of the economy and inflationary pressures, which will, in turn, influence the direction of the Fed’s monetary policy.

In terms of market sentiment, a rally on Wall Street—fueled by optimism surrounding Anthropic’s planned IPO—along with a decline in oil prices, has provided support for the US dollar. The greenback strengthened notably against the euro, the pound sterling, and the yen.

Newsmaker Analysis: The dollar’s ​​current strength remains heavily dependent on expectations regarding Fed policy. If GDP and PCE data indicate that the economy and inflation remain robust, the likelihood of a December rate hike could increase, further bolstering the dollar. Conversely, any dovish signals from the Fed could cap the dollar index’s gains and create room for other major currencies to rebound.

Source: Newsmaker.id