As the Federal Open Market Committee (FOMC) meeting approaches on September 18, traders and investors are curious about the potential direction of the United States Dollar as the Federal Reserve contemplates its first interest rate cut in years.
Market speculation following today’s release of the Consumer Price Index (CPI) year-over-year inflation at 2.5% hints at a high likelihood of a 25 basis points (bps) interest rate reduction, as indicated by the CME FedWatch tool projecting an 87% probability of this decision.
With a general belief in a rate cut, there is a growing preference for a 25-bps reduction over a 50-bps decrease, especially evident post the CPI data update.
In light of this, a trading analyst on TradingView foresees a potential crash in the U.S. Dollar index (DXY) based on Elliott Wave theory’s third wave pattern, suggesting a short position against the dollar with an expectation of underperformance compared to the Euro (EUR) and Japanese Yen (JPY).
Looking for insights on the possible impacts of an interest rate cut, Finbold consulted Meta’s advanced AI model. The AI predicts a weakening dollar and potential consolidation in the lead-up to the FOMC meeting, with unfavorable scenarios for both 25 and 50 bps reductions in interest rates.
Ultimately, the AI model suggests a target range between 100 and 100.50 as the most probable outcome, with the DXY potentially dropping to 98 in the event of a 50 bps interest rate cut.
Disclaimer: This article should not be construed as investment advice; investing involves risks, and capital is at stake.
Source: [Meta AI predicts US Dollar next move ahead of Fed’s interest rate cut](https://finbold.com/meta-ai-predicts-us-dollar-next-move-ahead-of-feds-interest-rate-cut/) on [Finbold](https://finbold.com/).