Mizuho Bank: Dollar Could See Slight Gains If Fed Cuts Rates by 25 Basis Points
According to Golden Finance, UniCredit Bank foreign exchange strategist Robert Mialich said that the Federal Reserve is likely to cut interest rates by 25 basis points next week, instead of 50, which would be positive for the dollar, but the impact would be minimal.
Mialich said that a 25-basis-point cut implies that the Fed doesn’t intend to loosen policy aggressively, which could prevent further declines in the dollar, but is unlikely to trigger a strong rebound. "Euro/dollar is likely to continue trading above 1.10," he said. However, if the Fed cuts by 50 basis points, the pair could break through 1.12 as it would indicate that the U.S. economy is in worse shape than data suggests.