The US dollar is maintaining its upward momentum following the Federal Reserve's April meeting, driven by a hawkish tone from policymakers and remarks from Chair Jerome Powell. Investors interpret the Fed's messaging as a signal that tight monetary conditions may persist, reinforcing Treasury yields and sustaining demand for the greenback. Market participants remain cautious, weighing inflation prospects and economic data, which could confirm the trend.
Specifically, USD/JPY reached its highest level of the year, driven by policy divergence between the Fed's restrictive bias and the Bank of Japan's accommodative stance. Key events include US GDP and core PCE price index data. Meanwhile, USD/CHF is attempting a recovery, forming a V-shaped reversal pattern on daily charts.
The Fed held rates at 3.5-3.75% on April 29, as widely expected, with only one dissenter favoring a cut. Three members disagreed with the wording that rates will likely decline this year. Jerome Powell will remain a governor after his term expires on May 15, having previously planned to leave. The Senate Banking Committee approved Kevin Warsh's nomination as the next chair, though his appointment won't clearly accelerate rate cuts.
Geopolitical factors, including continued military blockade of Iran, support dollar demand as a haven. However, this strong dollar environment typically pressures risk assets like cryptocurrencies, as higher yields make traditional investments more attractive. The CME FedWatch tool shows an 85% probability of the Fed holding rates until 2027.
