US Dollar: FOMC fallout weighs on USD – MUFG

Lee Hardman at MUFG highlights that the US Dollar index has fallen back below 100.00 following last week’s FOMC meeting, as the Fed left rates on hold and Chair Kevin Warsh offered less hawkish guidance. MUFG’s forecasts assume no Fed hikes this year and point to gradual Dollar re‑weakening later in 2026, though clearer guidance is lacking and could add to market volatility.

Fed stance undermines near term dollar

"The US dollar has come under more selling pressure since last week’s FOMC meeting with the dollar index back below the 100.00-level after hitting a high at 101.64 last week."

"The lack of clear forward guidance from Fed Chair Kevin Warsh is making it more difficult assess how the Fed is likely to react which could contribute to more volatility in financial markets."

"Our latest forecasts for a gradual re-weakening of the US dollar later this year are built on the assumption that the Fed does not hike rates this year."

"We acknowledge that the US dollar could remain stronger for longer if the Fed pulls the trigger."

"It has been reported that Kevin Warsh has raised the probability of changing the frequency of FOMC meetings according to people familiar with the matter."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)