Will it fall first and then rise or continue to rise? The US dollar only gives 30 seconds to react?

XM Foreign Exchange APP News - Wednesday, October 29th. As the Federal Reserve's interest rate meeting this week is about to www.centrdom.infoe to an end, the focus of the foreign exchange market has shifted from "whether to cut interest rates" to "how to cut interest rates" and "what to do next." The U.S. dollar index is currently trading below 99, within a narrow range, and the 25 basis point interest rate cut has been almost fully reflected in the price at the trading level. What really has directional significance depends more on Chairman Powell's wording at the press conference - whether to define interest rate cuts as "precautionary fine-tuning" or move closer to a more continuous easing path; and how the www.centrdom.infomittee www.centrdom.infomunicates the policy path for this year and next year. During the data window caused by the government shutdown, the sensitivity of market sentiment to language was amplified, and the dollar's marginal response was therefore more dependent on the expected difference rather than the single resolution itself. From a macro perspective, if this rate cut is implemented as scheduled, it will lower the target range of the federal funds rate to 3.75%-4.00%. Nominal growth has not been weak before, but signs of softening on the employment side are accumulating: many large www.centrdom.infopanies have successively announced the optimization of white-collar jobs, and artificial intelligence and automation have improved efficiency while www.centrdom.infopressing demand for traditional jobs. Correspondingly, although the monthly decline in inflation is a structural disturbance after the tariff shock, the slowdown in the momentum of core prices still has a greater impact on the "risk balance" statement in policy www.centrdom.infomunication. Policies are not monolithic. At least one official may support a deeper rate cut of 50 basis points to hedge against weak employment risks sooner, reminding the market that the www.centrdom.infomittee still has clear differences on the trade-off between "preventing an economic downturn" and "preventing an inflation rebound." In terms of dot plots and forward guidance, the trend towards two interest rate cuts during the year has basically been established, but the real game is concentrated in 2026: if the Fed only givesThe misalignment between the relatively restrained cumulative easing, while interest rate swaps and forward pricing bet on deeper interest rate cuts, will become a key variable in the mid-term direction of the US dollar. If the "official path" is significantly slower than the "market path", the front-end yield of U.S. Treasury bonds may rebound in a hedged manner in the short term, and the U.S. dollar will also have room for periodic strength; however, if the guidance releases a signal of "more concern about the labor market," the widening of term spreads and falling nominal interest rates will put pressure on the U.S. dollar. Also note potential inflection points in balance sheet policy. If it is clear in this www.centrdom.infomunication that quantitative tightening (QT) is www.centrdom.infoing to an end, and reinvestment is more biased toward short-duration government bonds, the transmission mechanism of interest rates at both ends will undergo subtle changes: on the one hand, the decline in term premiums will help lower mid- and long-term yields and stabilize the financing environment; on the other hand, the marginal decline in front-end real interest rates will weaken the attractiveness of the risk-free return of the U.S. dollar through the interest rate channel. We are usually more restrained in our pre-FOMC positions, choosing to use the current short-term risk balance of the US dollar to be slightly biased towards "upside surprises": as long as journalists' rhetoric does not materialize the market's high-intensity bets on continuous easing, the US dollar may be supported by the expected gap. However, from a longer assessment period, the endogenous cooling of the job market, the cyclical contraction of corporate employment, and the efficiency turning point brought by AI are all likely to continue to depress the center of wage and service inflation in the www.centrdom.infoing months. When official data resumes and verifies this trend, the interest rate cut path may be pushed in a deeper direction by the market, and the medium-term downward pressure on the US dollar will also increase. If quantitative tightening officially ends and tilts towards short-duration reinvestment, the medium-term interest rate support for the US dollar will further weaken, which is worthy of continued tracking. To sum up, the impact of this meeting on the US dollar index is more like a game of "words and paths": the resolution itself has been fully priced in, and what really changes the direction is the Fed's contextual choice of strategies for December and 2026, as well as the reordering of the weights of employment and inflation risks. The U.S. dollar may receive a technical boost in the short term due to the "hawkish interest rate cut", but if subsequent data www.centrdom.infoes back online and confirms that the labor market has cooled, it will be difficult for the interest rate driver to stay on the side of the U.S. dollar for a long time.

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