Comment: US Dollar rebounds after Fed decision

Nikos Tzabouras, Senior Market Analyst at Tradu.com, commented:

“The US dollar has received a green light from the Federal Reserve to continue its recovery, as Chair Jerome Powell maintained a hawkish stance. He emphasised elevated inflation and a strong labour market, resisting pressure to commit to rate cuts in September. The Fed simply lacks sufficient justification to resume easing, and the period until its next meeting may not offer reason for such action. This cautious approach can support the greenback, provided optimism around the US economy persists. Recent agreements with key partners such as the EU offer reasons for hope, potentially offsetting some of the negative effects of tariffs on the US economy.

“However, the dollar’s recovery may prove short-lived. A rare dissent from two policymakers could embolden others to back a September cut, while the factors that drove the dollar’s decline in the first half of the year may persist in the coming months. Tariffs are now significantly higher following Trump’s return to the White House, posing economic risks. In addition, concerns about the deficit from the One Big Beautiful Bill could resurface at any time, while broader de-dollarisation trends are likely to continue.”