Analysts Forecast A ‘Hawkish Hold’ From Feds, Expect US Dollar Rally To Continue


Analysts expect the FOMC might hold on raising interest rates in the coming meeting.

Key Takeaways:

  • Investors expect the Federal Reserve to maintain the current interest rates.
  • The speculation has made traders bullish on the US dollar’s prospects.
  • The cryptocurrency market could also react to the news.

NEW DELHI ( — The Federal Open Market Committee (FOMC) will announce the federal funds rate on Sept. 20. Market experts have speculated that the Federal Reserve might put a hold on hiking the interest rates in the coming meeting.

The central bank has raised interest rates 11 times since 2022 in an effort to curb inflation. Though inflation rates have cooled, Aug. 2023’s 3.67% inflation remains far above the Fed’s target rate of 2%.

However, though analysts expect rates to remain the same, it is unlikely that the US central bank would start cutting rates.

According to a report by the CME Group, investors believe there is a 93% chance of the Fed maintaining the interest rates at current levels.

Bloomberg noted that speculators went bullish on the US dollar.
Bloomberg noted that speculators went bullish on the US dollar.

Furthermore, the prospect of a halt in interest rate hikes resulted in hedge funds turning bullish on the US dollar, according to a Bloomberg report. Bloomberg stated that major market players held 18,000 net long positions on the dollar in the week ended Sept. 12.

The recovery in the US economy, marked by steady consumer spending, likely contributed to the bullish shift in investor sentiment. However, eyes will be on the forecast for interest rates and economic growth, often called the ‘dot plot.’

The dot plot would likely help revive the US treasuries market, which is at the risk of suffering its third consecutive year of loss.

Impact Of A Potential Fed Rate Hike Pause On Crypto

Meanwhile, the markets have already started reacting to the potential pause in the rate hike. Analysts predict that the US dollar will likely continue. The US dollar index (DXY) has risen nearly 6% since mid-July 2023.

However, should the Fed continue its hawkish stance, the DXY might start a sell-off, per a post by market analyst Kevin Green.

Ideally, a strengthening dollar spells doom for the price action of cryptocurrencies and other assets linked to the dollar.

However, it seems that speculation of a pause in rate hike might turn out bullish for the crypto markets. The crypto market cap rose by nearly 1% on Sept. 18. If the speculations turn out true, stocks and cryptos might start rallying.

Further rate hikes would likely increase the recession risks, which might be a reason behind speculation of a rate hike pause.

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