DXY has closed this month with a bearish candle and also closed dead-on the same price as the previous month's lows. This suggest strong bearish pressure and with the Fed rate decision today, NFP on Friday and increasing uncertainty around Trump's policies, we could see continued bearish price action for the dollar in the coming months. Today's US interest rate decision is widely expected to see no change and has only a 4% chance of a 25bps hike, according to CME FedWatch. This is due to factors such as concerns regarding Trump's policies, as well as a miss on Q4 GDP data and a lower than expected NFP figure last month. In terms of market reactions, if the Fed stand pat we are likely to see minimal volatility especially as there is no press conference from Yellen with the release of the data. Comments from the Fed are likely to justify the decision and reiterate they will 'watch data closely' before increasing rates again. However, if the comments are more hawkish then we will see a bullish move for the dollar as markets are only pricing in two hikes this year, even though the median participant forecast is still calling for three hikes.
