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2025-09-17 11:16:27
[Dollar Rebound Imminent, Barring a Surprise 50 Basis Point Fed Rate Cut] 1. Market analysis suggests that unless the Federal Reserve unexpectedly announces a 50 basis point rate cut on Wednesday and sends a strongly dovish signal, the dollar is likely to rebound, while US stocks may face profit-taking pressure. 2. The US dollar index is currently hovering near the 41-month low reached in July. Meanwhile, the S&P 500 and Nasdaq have hit record highs, and US Treasury yields are approaching their April lows. The market has largely priced in a 25 basis point rate cut. 3. Given the recent weakness in the US labor market, investors are pricing in a cumulative 68 basis points of rate cuts by Christmas, 130 basis points by July of next year, and a final rate of 3.00-3.25% by the end of 2026. If the Fed only cuts by 25 basis points, as expected by the market, this could lead to a "buy the forecast, sell the reality" reaction, potentially hindering the dollar's current decline and US stock market's rally. 4. Maintaining the current market trend may require the Federal Reserve to cut interest rates by 50 basis points, and Chairman Powell has clearly stated his support for easing. Although the market believes that the probability of a large-scale rate cut is only 3%, the significant downward revision of employment data may prompt the Federal Reserve to take more decisive action. 5. Standard Chartered Bank strategist Steve Englander predicts that the Federal Reserve may cut interest rates by 50 basis points, but Powell may be cautious about subsequent easing, and the dot plot may show another 25 basis point rate hike this year. If the US dollar index falls below the support of 96.37, the next target is 95.24, and resistance levels are seen at 98.00-10 and 98.50.
