US Dollar Index (DXY) holds previous gains above 99.00 ahead of the Fed

• The USD Index remains above 99.00, and keeps a frail weekly recovery with all eyes on the Fed.
• The US central bank is expected to cut rates for the second consecutive meeting and signal a pause.
• Investors will watch the "dot plot" to confirm their views of two to three further rate cuts in 2026.

The US Dollar Index (DXY)is trading practically flat on the daily chart, following a rejection at the 99.30 area on Tuesday, with downside attempts contained above the 99.00 line, as investors bid their time awaiting the outcome of the Federal Reserve meeting, due on Wednesday, at 19:00 GMT.

The DXY, which measures the value of the greenback against a basket of six currencies, is facing mild bearish pressure as traders square trim their USD long positions ahead of the Fed’s decision, although the strong US Treasury yields keep underpinning a mild recovery in the first half of the week.

The Fed might deliver a hawkish cut on Wednesday

The market practically discounts a 25-basis-points rate cut, and therefore the main focus will be on Chairman Powell’s press release and on the committee’s interest rate projections, the so-called “dop-plot”. Investors will be eager to know if the consensus of two to three rate cuts for 2026 is realistic.

Recent US data revealed that employment demand increased after the summer, which has eased concerns about the labour market. JOLTS Job openings data showed an increase to rose to 7.658 million in September and to 7.67 million in October, from 7.227 million in August, beating market expectations of a slight decline to 7.2 million.
pave
These figures, coupled with the sticky inflation levels shown by the US PCE Price Index data last week, endorse the postulates of the Fed’s hawkish party and pave the path for Chairman Powell to raise the bar for further monetary policy easing.

US President Donald Trump, did not leave the opportunity of putting some pressure on the bank and called for sharply lower interest rates in an interview with Publico on Tuesday, calling Powell names for not lowering borrowing costs fast enough.