Markets broadly expect the Fed to opt for a 25 basis point cut in the rate in September. The minutes of the Federal Reserve's (Fed) monetary policy meeting on July 29-30 will be published on Wednesday at 3 PM Brasília time.
The US central bank decided to keep the monetary policy rate in the range of 4.25%-4.5% at this meeting, but Fed governors Christopher Waller and Michelle Bowman disagreed, preferring to reduce the federal funds rate by a quarter percentage point.
FOMC's July meeting decision
The Federal Open Market Committee (FOMC) decided to keep the interest rate unchanged at the July meeting.
In the policy statement, the Fed reiterated that inflation was still 'somewhat elevated,' while pointing out that recent indicators suggested that economic activity growth moderated in the first half of 2025.
In a statement released a few days after the July meeting, Fed Governor Waller explained that he disagreed because he viewed the tariffs as a one-time price event that policymakers should 'ignore' while inflation expectations remained anchored.
Similarly, Fed Governor Bowman argued that slower growth and a less dynamic labor market make it appropriate to begin gradually shifting the moderately restrictive policy stance to a neutral setting.
She added that they should begin to give more weight to risks to the employment mandate.
Mixed economic data
Meanwhile, the data released after the meeting presented a mixed picture. Non-farm payrolls (NFP) in the US increased by 73,000 in July, but NFP increases for May and June were revised down to 125,000 and 133,000, respectively.
Recently, the US Bureau of Labor Statistics reported that annual inflation, measured by the change in the Consumer Price Index (CPI), remained unchanged at 2.7% in July.
On a more concerning note, the Producer Price Index (PPI) rose 3.3% year-on-year, a sharp increase from the 2.4% rise recorded in June.
What to expect from the minutes
The FOMC will release the minutes of the July 29-30 policy meeting at 3 PM Brasília time on Wednesday.
According to the CME FedWatch tool, markets are currently pricing in an approximately 83% probability of a 25 basis point cut at the next meeting.
This market positioning suggests that the US$ may weaken against its rivals in immediate reaction if the publication shows that policymakers are willing to ease the policy rate in September.
On the other hand, the US$ may maintain its position if discussions highlight that most Fed officials remain reluctant to cut rates, given the uncertainty surrounding the impact of tariffs on the inflation outlook.
However, the market's reaction to the FOMC minutes may remain short-lived, as the meeting took place before the latest employment and inflation data releases.
Additionally, investors may choose to wait for Fed Chair Jerome Powell's speech at the Jackson Hole Symposium before taking large positions on the possible Fed policy outlook.
Eren Sengezer, senior analyst for the European session at FXStreet, shares a brief outlook for the US$ Index:
The Relative Strength Index (RSI) on the daily chart remains slightly below 50 and the US$ Index hovers around the 20-day and 50-day Simple Moving Averages (SMAs), reflecting a neutral stance in the short term.
On the upside, the 100-day SMA aligns as a key resistance level at 99.00, ahead of 99.80-100.00 (23.6% Fibonacci retracement of the downtrend from January to July, psychological level) and 101.65 (38.2% Fibonacci retracement).
Looking south, support levels can be identified at 97.50 (static level), 96.50 (end point of the downtrend), and 95.50 (midpoint of the descending regression channel).
The article 'FOMC Minutes Offer Clues on Interest Rate Cut Possibility Amid Tariff Uncertainty' was first seen on BeInCrypto Brazil.
