Fed cannot afford to make any mistakes today. Esther Reichelt, FX Analyst at Commerzbank, analyzes how the FOMC decision could move the Dollar.

Dollar’s balancing act

“The more the Fed focuses on the disinflationary aspects of the recent market turmoil, the more difficult it will be for the Dollar to hold its ground, especially against the Euro, now that the ECB has clearly spoken out in favor of further interest rate hikes.” 

“If the focus remains on inflation risks when setting interest rates, while at the same time, the Fed manages to calm the markets by pointing to its options beyond interest rates, the Dollar should be able to regain ground. Today's decision, therefore, remains a balancing act.”

See – Fed: Banks Preview, no pause yet, going ahead with 25 bps hike