A 50-basis point interest rate cut, if it were to come from the Fed tonight, would be negative for the US Dollar . The Fed's reaction function is more aggressive than previously thought, and not just for today, but possibly for the future, which is USD-negative, Commerzbank’s FX analyst Antje Praefcke notes. USD gains on a 25 b.p.
” “If he is clearly concerned that a recession is looming, the market could quickly revert to its expectation of a fairly aggressive rate cut cycle in the coming months, putting the dollar under pressure again. Only if Powell appears confident that the economy will hold up fairly well, the USD is likely to defend its position or even strengthen a little.” “I am not very confident that Powell would even be able to dispel the market's concerns.