The United States dollar is expected to weaken when the Fed maintains interest rates

The Federal Reserve Chairman, Kevin Warsh, will announce on 29 July the Federal Open Market Commission (FOMC) interest rate decision, which the market generally expects to maintain for the fifth consecutive period at 3.5 to 3.75 per cent. According to CME Fedwatch data, the probability of maintaining interest rates constant is 95 to 98 per cent. TD Securities states that traders continue to overestimate the probability of an unexpected increase in interest rates and that the associated pricing includes a risk premium resulting from the situation in Iran. The Agency is of the view that if the Federal Reserve maintains interest rates as expected, the deviation between current market pricing and actual policy actions will narrow. TD Securities predicts that the US dollar would fall by about 2 per cent in the second half of 2026 if the Fed remained interest-free for a longer period. The Agency believes that the Fed needs to see clearer evidence of continued inflation and strong labour markets before considering interest rates。