Dollar index holds steady at 100.80 as markets await Fed rate verdict

The US Dollar Index (DXY) is trading flat at 100.80 as forex markets enter a holding pattern ahead of the Federal Reserve's pivotal rate decision this afternoon. Major currency pairs show minimal movement, with EUR/USD at 1.1120, GBP/USD at 1.3200, and USD/JPY at 146.20. Market consensus points to the Fed's first rate cut since 2020, though debate continues between a 25bp or 50bp reduction. Fed funds futures currently price in 65% probability of a 50bp cut. Economic data supporting a cut includes cooling inflation (CPI at 2.5%) and softening labor markets. However, GDP growth remains resilient at 3.0%. Beyond the rate decision, traders will scrutinize the dot plot projections and Chair Powell's press conference for clues about the pace of future cuts. A 50bp cut could trigger sharp dollar weakness across all majors, while a 25bp move might actually strengthen USD if markets interpret it as the Fed maintaining a cautious approach.