FX.co ★ Dollar Steadies as Traders Assess Fed Outlook

The dollar index hovered around 100.2 on Friday, staying near a seven-week high as traders reassessed the Federal Reserve’s policy outlook following its latest rate decision and in the context of easing oil prices. The index is on track for a weekly gain of more than 1% after the FOMC unanimously raised the federal funds rate by 25 basis points to 3.75%-4%, its first increase in three years. Policymakers also signaled that further tightening is possible later this year in an effort to contain mounting inflationary pressures, with Chair Kevin Warsh emphasizing that inflation remains elevated.

Elsewhere, the Bank of Japan is also expected to raise interest rates, while the Bank of England kept borrowing costs unchanged on Thursday but warned that a prolonged conflict in the Middle East could ultimately necessitate a rate hike. At the same time, oil prices fell for a third straight session as Saudi Arabia moved to restore flows through its East–West pipeline, helping to ease inflation concerns.