The Dollar Remains On Track

The dollar is right on its projected path as expected. Inflation has prevented the Fed from lowering rates at least once. Can we expect a rate drop before the end of the year?

My guess is that even with a bit of inflation showing the Fed will drop rates at least once. There are several reasons for my conclusion here not least of which are weakening economic indications which are too numerous to list for the purposes of this post but some of which are the collapsing car market, cc default rates exploding, commercial real estate vacancies still increasing, and many other factors and lead indicators.

There is also the fact that the Fed was initially expected to drop rates 3 times in 2024. Failing to drop at least once before the end of the year would have psychological ramifications on the market that potentially could be disastrous.

And finally, there is the fun fact that historically the Fed has always adjusted rates in an election year. There is only one exception to this rule …2012. Based upon this statistic alone we can see that the probability of a rate adjustment this year is high. And we know that if there is an adjustment, it will almost certainly be to the downside as that is what has been expected all along. Any anomaly to expectations would cause chaos and catastrophe in the markets.

All this being said we can then continue to expect the dollar to travel its expected pathway …down. 103.5 is the next support. Below that is that pink ascending trendline around 102 and rising.