With the Federal Open Market Committee (FOMC) meeting approaching on September 18, finance traders and investors are eager to know the potential outcome for the United States Dollar due to a possible interest rate cut by the Federal Reserve after years of stability. The Consumer Price Index (CPI) inflation rate of 2.5% released recently has sparked speculation in the market regarding the Fed’s decision, with the CME FedWatch tool showing an 87% probability of a 25 basis points interest rate reduction. The likelihood of a rate cut is now at 100%, although only 13% of investors anticipate a larger 50 bps decrease. These expectations have intensified following the latest CPI data.
In a TradingView analysis, a trading analyst suggests a forthcoming crash for the U.S. Dollar index (DXY) based on the Elliott Wave theory, advising a short position against the dollar and projecting weaker performance compared to the Euro (EUR) and Japanese Yen (JPY). The current DXY trading at 101.75 supports this prediction.
Furthermore, utilizing Meta’s advanced artificial intelligence model, Llama 3.1 Large, forecasters predict a weakening dollar with potential consolidation leading up to the FOMC meeting, hindering scenarios for a 25 or 50 bps interest rate decrease. The AI predicts a target range of 100 to 100.50 as the most probable, with the potential for DXY to drop as low as 98 with a significant interest rate cut of 50 bps.
As a disclaimer, it’s important to note that the information provided is not financial advice, and investing always carries inherent risks.