USD News: Fourth consecutive rate hold spurs Asian session dollar rally

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Under pressure for much of 2025, the dollar (DXY) is on track for its best weekly gain since February, driven by hawkish Fed commentary following yesterday’s interest rate decision.

In today’s session:

• The US Dollar (DXY) currently trades at around $98.95, up +0.09%
• EUR/USD currently trades at around 1.14744, down -0.02%
• Ahead of the open, Dow Jones futures trade -0.36% lower

Read more on the Asian session: Asia mid-session: Fed flags stagflation risk, US dollar rebounds, risk-off in equities

US Dollar (USD): Key Takeaways from today’s session

• Unanimously voting to maintain rates at ~4.50% in yesterday’s decision, the most recent vote represents the fourth consecutive rate hold by the Federal Reserve, who remain cautious of tariff-borne inflation
  

• Although acknowledging inflation has come down “a great deal” from 2022 highs, surprisingly hawkish commentary from Fed Chair Jerome Powell has helped bolster dollar pricing
  

• Otherwise, recent inflows into safe-haven assets, coupled with a general strengthening of world crude prices, also stand to benefit the dollar

U.S. Dollar Index (DXY), TVC, TradingView, 19/06/2025

US Dollar (USD): Tariffs to blame for fourth consecutive rate hold

Fair to say, the outcome of yesterday’s decision does not come as a surprise to many.

While the maintenance of headline rates at ~4.50% was widely expected by markets, being priced in some time ago, Jerome Powell’s tone during the press conference was perhaps the most interesting development of the last twenty-four hours.

Speaking more hawkishly than expected, especially in light of recent data, Powell not only referred to how current inflation remains above target, but also, at least according to Fed policymakers, how “near-term inflation expectations have increased in recent months”, predictably citing tariffs as the primary cause.

"Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated"

Federal Reserve FOMC Statement Press Release, 18/06/2025

With that said, it would seem the Fed remains committed to a ‘wait-and-see’ strategy for now, much to the dismay of current 1600 Pennsylvania Avenue resident Donald Trump, taking to TruthSocial to share his thoughts on current monetary policy:

@realDonalTrump, TruthSocial, 19/06/2025

All things considered, markets are now reigning in expectations for rate cuts this year. Most predict fewer cuts before year-end, with at least one outcome in the short term being a stronger dollar.

CME FedWatch, CME Group 19/06/2024

Read the full release: Federal Reserve FOMC Statement Press Release, 18/06/2025

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