According to Golden Finance, ING believes there is a slightly higher chance of the Fed cutting interest rates by 25 basis points, but while remaining cautious, it will send a dovish signal. This could include some members voting for a 50 basis point cut and Powell opening the door for further large-scale rate cuts in the future. A 25 basis point cut could lead to a rise in the dollar, however, if our expectations of a dovish press conference from Powell are correct, the dollar could find it difficult to sustain gains in the short term. A 50 basis point cut would trigger panic, weakening the dollar. Powell would then need to show that a 50 basis point cut is not a "panic" move, i.e., the Fed is not overly concerned about a recession and the job market.

ING said that EUR/USD is likely to trade in a narrow range ahead of the Fed's meeting later this week, with a 25 basis point cut or a 50 basis point cut being very close. In a report, ING analyst Francesco Pesole said: “If the Fed cuts rates by 50 basis points and markets interpret it as a panic move, the dollar's weakness could be transmitted through the euro, the yen and the Swiss franc, while risk-sensitive currencies such as the Norwegian krone and the Swedish krona could be hit.” However, he said the Fed should cut rates by 25 basis points, which could initially push the euro below $1.10, but it could gradually recover in the following days. (Jin Shi)