[MARKET ANALYSIS] Dollar takes a breather and holds on to post-FOMC spoils

DXY: Flat

• Takes a breather and holds on to the prior day's spoils after climbing back above the 100.00 level owing to the broad hawkish reaction to the FOMC meeting, where the Fed hiked rates by 25bps as expected in a unanimous decision, while the updated SEPs median view was for another 25bps hike this year, followed by rates remaining on hold throughout 2027. In terms of Fed Chair Warsh's presser, the overall message was a familiar one, with price stability the primary focus, while there were later comments from US President Trump that interest rates in the US should be 1% or less and called for a fast cut to US rates, although Trump also told Warsh to do what he wants and said that he wants Warsh to be independent.

EUR/USD: Flat

• Languishes near post-FOMC lows after slumping to sub-1.1500 territory owing to the hawkish Fed.

GBP/USD: Flat

• Retreated beneath the 1.3400 handle as the dollar strengthened on the Fed, while in-line UK CPI data is unlikely to shift views for the BoE's MPC at today's confab, where rates are expected to be held steady in a 6-3 vote split.

USD/JPY: Flat

• Plateaued overnight after climbing to 156.00 territory in reaction to the Fed announcement, while the BoJ also kicks off its 2-day policy meeting where the central bank is seen to be backed into a corner and expected to hike rates following rare joint currency intervention in July and rhetoric from officials, including pressure from the US.

Antipodeans: AUD/USD +0.2% / NZD/USD +0.2%

• Nurses some of their recent losses as sentiment in Asia-Pac proves to be resilient, while participants also digest the stronger-than-expected New Zealand GDP data.

Consolidation sessions of this kind, where the dollar pauses after a hawkish FOMC repricing, are the standard sequel to a decision day: the initial move prices the statement and SEP, and the follow-through tends to depend on whether subsequent data validate the dots rather than on the meeting itself. The notable feature here is that the hawkish impulse came from the projected path, an additional hike and an extended hold, rather than from the delivered 25bps, which historically concentrates the risk in upcoming inflation and labour prints since those are what confirm or unwind a forward dot. Political pressure for rapid easing alongside public deference to Fed independence is a familiar pattern and has tended to matter for the curve only when it translates into personnel or institutional change, not as rhetoric alone. The cross-asset tells are the policy divergences now in play: a BoE expected to hold with a split vote keeps sterling trading the dollar leg and the vote margin, while a BoJ expected to hike under the shadow of prior joint intervention puts USD/JPY in the rare position where both sides of the pair are live, a setup in which intervention risk has historically capped follow-through on dollar strength in that pair. The antipodean bounce on regional resilience and a firm GDP print fits the usual pattern of high-beta currencies recovering first once the dollar stalls, though such moves tend to fade if the Fed path reasserts itself. The next markers are the BoE vote split, the BoJ statement and any commentary around intervention, and the data calendar against which the new dots will be tested.