U.S. Dollar Holds Firm Ahead of Fed Decision as Traders Reassess Global Risk

The U.S. dollar index (DXY) hovered near 99.00 today as investors waited for clarity from the Federal Reserve’s upcoming policy meeting. Traders are torn between weaker U.S. inflation data and growing fiscal concerns, leaving the greenback caught in a narrow but critical range.

Market Setup

• Fed caution: Recent data suggests inflation is easing, but Fed officials remain reluctant to cut rates too soon. A balanced or “wait and see” tone could keep the dollar supported.

• Fiscal jitters: U.S. deficit spending and rising Treasury yields continue to attract foreign inflows, offsetting some dovish expectations.

• Global risk tone: Optimism over trade talks has reduced demand for the dollar as a safe haven but only slightly.

“The dollar’s resilience shows investors aren’t ready to price in full Fed easing yet,” said ING analyst Francesco Pesole. “It’s more about patience than conviction right now.”

Until the Fed clarifies its next step, the dollar remains the world’s default hedge. Traders are positioning cautiously bullish enough to hold, but not enough to chase.