As the Federal Open Market Committee (FOMC) meeting approaches on September 18, finance traders and investors are pondering the potential next steps for the United States Dollar. Speculation is rife that the Federal Reserve might opt for its first interest rate cut in years.
Following the release of the Consumer Price Index (CPI) year-over-year inflation at 2.5%, market anticipation regarding the Fed’s decision is high. The CME FedWatch tool currently suggests an 87% likelihood of a 25 basis points (bps) interest rate reduction.
Overall, the market consensus is leaning heavily towards a rate cut, with a near-unanimous 100% agreement on the possibility. While a 25 bps cut is widely expected, only 13% of investors foresee a steeper 50 bps decrease, with this expectation gaining momentum following the latest CPI data release.
Insight into the U.S. Dollar Index (DXY)
In light of these developments, a trading analyst has shared a compelling prediction on TradingView, anticipating a significant crash in the U.S. Dollar index (DXY). According to the analyst yuchaosng, the DXY is exhibiting patterns aligned with the third wave of the Elliott Wave theory, suggesting a forthcoming downturn.
The trader recommends taking a short position against the dollar and expects it to perform poorly compared to the Euro (EUR) and the Japanese Yen (JPY). Currently, the DXY is trading at 101.75.
AI-Based Prediction on U.S. Dollar (DXY) Price Movement Post Rate Cut
Seeking further insights, Finbold approached Meta’s (NASDAQ: META) advanced artificial intelligence model, Llama 3.1 Large, for a prediction on the U.S. Dollar Index’s future trajectory and price forecast.
According to Meta AI’s analysis, a weakening trend is anticipated for the dollar, although a period of consolidation is likely in the lead-up to the FOMC meeting. However, the scenario does not bode well for an interest rate cut, whether at 25 or 50 bps.
In essence, the AI model envisions a target range between 100 and 100.50 as the most probable outcome. There is a potential for the DXY to plummet as low as 98 if a 50 bps interest rate cut materializes.
Disclaimer: The information provided in this article is not intended as financial advice. Investing involves risk, and individuals should exercise caution when making investment decisions.
The original article “Meta AI predicts US Dollar next move ahead of Fed’s interest rate cut” can be found on Finbold.