USD pairs consolidate as divided Fed decision approaches this week

Major USD pairs are trading in tight ranges as markets await the Federal Reserve's policy decision amid mixed signals from committee members. EURUSD hovers near 1.0520, while GBPUSD consolidates around 1.2730, with implied volatility rising ahead of the announcement. The divergence in Fed officials' views regarding 2026 monetary policy has created uncertainty, with markets pricing in a 70% probability of a 25 basis point cut this meeting. Asian currencies showed mixed performance, with USDJPY holding above 152.00 as traders weigh potential BoJ intervention risks. The dollar index (DXY) remains elevated near 106.50, supported by resilient US economic data but capped by rate cut expectations. Key resistance for EURUSD sits at 1.0550, while support emerges at 1.0500. Traders should expect heightened volatility post-Fed, particularly if the committee's dot plot reveals significant changes to the 2026 rate outlook.