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It’s interesting that Powell did not bring potential rate cuts to the table, which was widely expected given the risk of recession from the tariffs announced by Trump. But apparently, Powell’s main concern right now is not recession—it’s inflation. He seems to believe that a recession can still be avoided, while inflation could rise further in the coming months due to trade wars. This is likely why the Fed doesn't want to act too quickly with rate cuts, as doing so could only fuel inflation even more.

DXY 4H Chart

Because of this, the US dollar is sideways and could still see some stabilization in the next few trading days or after the holidays, which usually bring some shifts in flows in the short term. Looking at the intraday price action on the dollar index, we’re still not at the lows, so there’s a possibility of another and final drop toward the 98.00–98.50 area before the market turns up into a higher-degree correction. Or can this one be triggered by lower euro if ECB cuts?

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