US Dollar Index Holds Near 97.80 as Markets Await Fed Speeches

The US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, traded higher around 97.80 during Monday’s Asian session. The dollar’s strength extended as traders positioned ahead of a series of speeches from Federal Reserve officials that could provide fresh signals on the US interest rate outlook.

Fed Delivers First Rate Cut of the Year

Last week, the Federal Reserve reduced the Federal Funds Rate by 25 basis points, setting a new target range of 4.00% to 4.25%. Chair Jerome Powell described the move as a “risk management cut,” aimed at supporting a labor market that has shown signs of weakening while inflation pressures remain elevated.

Powell also pushed back on expectations of aggressive easing, emphasizing that the Fed will continue to take a meeting-by-meeting approach. This less dovish tone helped the dollar recover, keeping the DXY supported above recent lows.

Governor Miran Pushes for Deeper Cuts

Fed Governor Stephen Miran dissented from the decision, voting instead for a steeper 50 basis point reduction. He stressed that his decision was made independently, dismissing suggestions of political influence over his vote. Miran is scheduled to expand on his reasoning in a speech later Monday, which markets will closely monitor for insight into the Fed’s internal debates.

Market Focus Turns to Fedspeak and Independence Concerns

Traders are bracing for a busy week of commentary from Fed officials. Analysts suggest that Miran’s speech will be the most closely watched, given his views on the Fed’s independence and the potential influence of the White House.

Joseph Capurso, head of FX, international and geoeconomics at Commonwealth Bank of Australia, noted that Miran’s remarks could shape investor perceptions about the Fed’s credibility and independence, both of which remain critical for global markets.

Outlook for the Dollar

The US Dollar Index remains well-supported for now, but lingering concerns about political pressure on the central bank could limit upside momentum. With the Fed signaling caution and traders parsing every word from policymakers, currency markets are expected to stay volatile through the week.