Post-FOMC USD Price Action: Can the U.S. Dollar Follow Through?

USD, FOMC, EUR/USD, USD/JPY, GBP/USD Talking Points:

• The Fed was a bit more-hawkish in today’s forecasts for 2025 rate expectations than last quarter.
• It was the press conference that seemed to be a bigger push point for prices, as Powell didn’t seem to be in a hurry to cut rates. He said ‘the labor market’s not crying out for a rate cut,’ while also discounting the forecasts looking for two cuts into the end of the year, saying ‘no one holds these rate paths with a lot of conviction.’
• The response in USD so far has been bullish, similar to other Fed meetings this year. The big question now is follow-through.
• I’ll look into these themes with some additional feedback in next week’s webinar, and you’re welcome to join. Click here to register.

Video

The Fed was a little bit more hawkish for 2025 in today’s Summary of Economic Projections as compared to March. This installment saw seven votes for no changes to rates this year, up from four in March. Two of those votes came from the one cut camp and one came from a voter that was previously looking for two 25 bp cuts this year.

Markets remain centered on that 50 bp cut expectation but from the sound of Jerome Powell, there remains a massive amount of uncertainty around tariffs, and until that resolves or unless there’s some overriding reason for the bank to push rates, he seems to see little reason to do so. And as he said, ‘the labor market’s not crying out for a rate cut.’

In response the USD moved higher and from the four-hour chart, we can see the currency with a pattern of higher-highs and lows after the early-week re-test of the long-term trendline.

U.S. Dollar Four-Hour Price Chart

Chart prepared by James Stanley; data derived from Tradingview

USD Daily

The daily chart of USD highlights a falling wedge pattern, often approached with aim of bullish reversal. There’s also been the continued hold of support at the longer-term trendline projection, and a recent case of RSI divergence illustrating just how extended this sell-off has been.

But, again, the important component here will be what the USD has lacked so far this year after FOMC meetings, and that’s follow-through, with each of the prior three rate decisions illustrated on the below chart with vertical lines.

U.S. Dollar Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Strategist