US Dollar Nears Crucial Support Level Post-Fed: What's Next for the Greenback?

investing.com:

In recent days, the financial markets have witnessed a shift in focus, moving from geopolitical concerns to economic data, largely due to a waning Middle East news flow.

Geopolitical tensions still loom large as a substantial risk to the global economy. Escalating energy costs, particularly in nations grappling with high inflation, complicate the efficacy of monetary policies employed by central banks. Given this context, the decision made during the recent US Fed's FOMC meeting is significant for the US economic trajectory.

While the Fed, in line with expectations, opted to leave interest rates unchanged within the range of 5.25% to 5.50% this month, there's a growing market sentiment that the peak interest rate has been reached, marking the start of a forthcoming period of rate adjustments. Moreover, the FOMC statement acknowledged rapid economic growth in the last quarter alongside persistent high inflation. Notably, it highlighted the cost pressures stemming from higher interest rates, which could impact employment and inflation.

Within this framework, the central bank underscored its commitment to employ monetary policy tools effectively to address heightened risks of deviating from the inflation target. Chairman Powell emphasized that future decisions would hinge on economic data and clarified that interest rate cuts are not currently on their agenda.

Against this backdrop, the release of nonfarm payrolls tomorrow and October's inflation data will serve as pivotal indicators for assessing whether the Fed will proceed with a rate hike in December.

Meanwhile, the US dollar has maintained a sideways trajectory, experiencing minor declines amid the perception that interest rates have peaked. This holding pattern for