By: James Stanley, Sr. Strategist
James Stanley, FOREX.com Senior Strategist, assesses the U.S. dollar’s resilience despite rising market expectations for a September Fed rate cut.
Stanley notes that the dollar’s current position reflects a mix of macroeconomic signals and political pressure. CPI data shows inflation holding at 2.7% headline and rising to 3.1% core, while the NFP report’s revisions stirred recession fears. President Trump’s repeated calls for rate cuts have intensified expectations, with markets fully pricing in a September cut.
Looking back to September 18 last year, Stanley highlights how the Fed’s 50bps cut coincided with the dollar setting a low before rallying into January, even as further cuts followed. This, he argues, shows that rate cuts do not necessarily weaken the dollar or lower long-term yields.
Stanley sees a balanced approach as essential. For USD weakness, he favours GBP/USD, which has recovered above 1.35 after holding key support zones. For USD strength, he is tracking EUR/USD, noting critical Fibonacci levels and lower high structures that could validate a bearish case if they hold.
Stanley warns that while markets expect a dovish Fed through year-end, the dollar’s resilience and mean-reversion tendencies in FX suggest traders should prepare for multiple outcomes. He emphasises the importance of tracking both macro data and technical setups as the September decision approaches.
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---- Written by Frederic Guetin, StoneX TV Producer
---- Expert: James Stanley, FOREX.com Senior Strategist
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