Senior Economist: Markets Misread the Fed, Interest Rates to Remain Steady for Rest of Year

The DXY is trading at 100.78, down 0.58% over the past 24 hours. The RSI is approaching oversold territory at 30.4, while the MACD remains below the signal line and in negative territory. Although the news headline emphasizes the Fed's decision to keep interest rates unchanged, which could support the dollar, technical indicators point to weakness. The short-term outlook suggests a higher probability of continued downward momentum.

USDJPY is in oversold territory with an RSI of 27 and trading negatively below the MACD signal line. While news that the Fed has dashed rate cut expectations could strengthen the dollar, technically the pair is already in a downtrend, which may create additional selling pressure in the short term. Trading below the 20- and 50-day moving averages confirms the continuation of the bearish trend. The oversold condition could trigger a short-term corrective bounce, but the overall trend remains downward.

USDTRY is trading at 46.695, posting a limited 0.2% gain over the past 24 hours. The RSI stands at 59.9, indicating neutral territory, while the MACD is just below the signal line and moving sideways, offering no clear short-term momentum signal. Headlines reinforce expectations that the Fed will hold interest rates steady, which generally has a neutral impact on emerging market currencies. However, USDTRY shows limited reaction to Fed news due to local dynamics and inflation expectations. Technically, the proximity of SMA20 and SMA50 suggests continued movement within a horizontal band. Therefore, no clear directional move is expected in the near term.

The news suggests that the Fed may disappoint rate cut expectations. This could reduce market optimism and create short-term selling pressure. Technically, the price closed below the 20-day moving average and the MACD is below the signal line, indicating weakness. However, the RSI in neutral territory and the price remaining above the 50-day moving average suggest that the decline may be limited.