The US Dollar (USD) extended gains on Friday, with the US Dollar Index (DXY) climbing 0.4% to 97.74 as the rebound from Wednesday’s Federal Reserve (Fed) meeting continued. The central bank delivered its first rate cut since December 2024, lowering the federal funds rate by 25 basis points (bps) to 4.00%–4.25%.
A divided Fed sets the tone
While the cut itself was widely anticipated, investor focus has shifted to the sharp divisions within the Federal Open Market Committee (FOMC). The 11–1 vote saw new Governor Stephen Miran dissent in favor of a 50 bps reduction, underscoring the influence of Trump’s appointees and highlighting political questions over the Fed’s independence.
The dot plot revealed a split outlook: nine officials see two further cuts this year, six prefer no additional easing, while one envisions 125 bps of total reductions through 2025. Forecasts for 2026 were equally divided, ranging from one to four cuts. Analysts say the divergence reflects uncertainty tied to policy shifts, data revisions, and the political climate.
Fed Chair Jerome Powell attempted to downplay the fractures, noting that “it’s not surprising to have such a wide range of opinions in such an unusual situation,” while emphasizing a meeting-by-meeting approach.
Next week: Powell in focus as blackout ends
The Fed’s communications blackout expired Thursday, paving the way for a wave of speeches from policymakers. New York Fed President John Williams kicks off the schedule Monday, followed by Michelle Bowman, Raphael Bostic, Lorie Logan, Austan Goolsbee, and others. Powell will take the stage Tuesday at 16:35 GMT in what markets expect to be the most consequential appearance.
Historically, speeches have often moved markets more than policy statements themselves. With Powell’s term set to end in 2026, investors will parse his remarks for clarity on the October and December rate path. According to CME’s FedWatch tool, markets still price in two additional cuts this year.
Technical analysis: DXY at resistance test
The DXY extended its post-Fed climb and is approaching a key resistance cluster at 97.67, where the 100-period Simple Moving Average (SMA) converges with the upper boundary of a bearish channel on the 4-hour chart.
A breakout above this level would reinforce the short-term bullish bias, with upside targets at 98.00, 98.65, and 99.00. Failure to clear resistance could see the index retreat back toward support at 96.22, keeping the broader bearish channel intact.
