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Markets Eye Fed Decision as Softer Dollar Supports Major Currencies | 29th July, 2026

Fed Decision Ahead

Global markets traded cautiously ahead of the Federal Reserve’s highly anticipated policy decision, with investors reassessing inflation trends and central bank expectations across major economies. A softer US Dollar provided support for several major currencies, while Australia’s lower-than-expected inflation data reinforced expectations of a less aggressive policy stance from the Reserve Bank of Australia. Meanwhile, traders closely monitored developments from the Eurozone, the United Kingdom, Canada, and China as monetary policy continued to drive sentiment across the foreign exchange market.

AUD/USD Forecast

Current Price and Context

The Australian Dollar remained in focus after Australia’s Consumer Price Index (CPI) slowed to 3.8% year-over-year in June, below the market expectation of 4.0%. Softer inflation reinforced expectations that the Reserve Bank of Australia may adopt a less restrictive monetary policy stance, limiting upside momentum for the Aussie.

Key Drivers

• Geopolitical Risks: Geopolitical developments had a limited impact compared to inflation and central bank expectations.

• US Economic Data: A weaker US Dollar provided some support for AUD despite softer domestic inflation.

• FOMC Outcome: Investors remained cautious ahead of the Federal Reserve’s policy announcement.

• Trade Policy: Stable regional trade conditions continued supporting Australia’s export outlook.

• Monetary Policy: Lower inflation strengthened expectations that the RBA may ease its policy stance sooner than previously anticipated.

Technical Outlook

• Trend: Neutral

• Resistance: 0.7040

• Support: 0.6970

• Forecast: AUD/USD may remain range-bound as softer inflation weighs on the currency while a weaker US Dollar limits downside pressure.

Sentiment and Catalysts

• Market Sentiment: Neutral as competing domestic and external factors balance price action.

• Catalysts: Federal Reserve policy decision, Australian employment data, and future RBA communications.

GBP/USD Forecast

Current Price and Context

The British Pound paused after its recent advance as investors assessed whether current market pricing had already reflected optimistic economic expectations. With limited domestic catalysts, Sterling’s direction remained closely tied to broader US Dollar movements ahead of the Federal Reserve meeting.

Key Drivers

• Geopolitical Risks: Geopolitical developments remained a secondary influence.

• US Economic Data: Softer Dollar sentiment provided underlying support for Sterling.

• FOMC Outcome: Investors refrained from taking large positions ahead of the Fed’s policy announcement.

• Trade Policy: Stable global trade conditions had little impact on the pair.

• Monetary Policy: Expectations for both the Federal Reserve and the Bank of England continued shaping market direction.

Technical Outlook

• Trend: Neutral to Bullish

• Resistance: 1.3430

• Support: 1.3340

• Forecast: GBP/USD may continue consolidating until the Federal Reserve provides greater policy clarity.

Sentiment and Catalysts

• Market Sentiment: Cautiously bullish while awaiting key central bank guidance.

• Catalysts: Federal Reserve decision, UK economic data, and Bank of England commentary.

EUR/USD Forecast

Current Price and Context

The Euro advanced against the US Dollar as investors reduced Greenback exposure ahead of the Federal Reserve’s policy decision. Expectations that the Fed could maintain a balanced tone encouraged demand for the common currency despite lingering uncertainty over the global economic outlook.

Key Drivers

• Geopolitical Risks: Stable geopolitical conditions shifted market focus toward monetary policy.

• US Economic Data: Broad Dollar weakness supported gains in EUR/USD.

• FOMC Outcome: The upcoming Fed decision remained the dominant market catalyst.

• Trade Policy: Trade developments played a limited role in current price action.

• Monetary Policy: Diverging expectations between the ECB and Federal Reserve continued influencing the pair.

Technical Outlook

• Trend: Bullish

• Resistance: 1.1820

• Support: 1.1750

• Forecast: EUR/USD could extend gains if the Federal Reserve adopts a less hawkish policy tone.

Sentiment and Catalysts

• Market Sentiment: Moderately bullish as traders position for potential Dollar weakness.

• Catalysts: Federal Reserve decision, Eurozone economic releases, and ECB commentary.

USD/CAD Forecast

Current Price and Context

The Canadian Dollar remained supported as investors trimmed bullish US Dollar positions ahead of the Federal Reserve meeting. Improved market sentiment and cautious Dollar trading allowed the Loonie to remain on the front foot despite mixed commodity price performance.

Key Drivers

• Geopolitical Risks: Stable geopolitical conditions supported broader market confidence.

• US Economic Data: Softer Dollar sentiment favored the Canadian Dollar.

• FOMC Outcome: Markets awaited policy guidance before establishing new positions.

• Trade Policy: Trade developments had a limited effect on the currency pair.

• Monetary Policy: Expectations surrounding the Federal Reserve remained the primary driver.

Technical Outlook

• Trend: Bearish USD/CAD

• Resistance: 1.3960

• Support: 1.3890

• Forecast: USD/CAD may continue edging lower if the Federal Reserve delivers a balanced or dovish policy message.

Sentiment and Catalysts

• Market Sentiment: Moderately bearish for USD/CAD.

• Catalysts: Federal Reserve policy decision, crude oil prices, and Canadian economic releases.

USD/CNY Forecast

Current Price and Context

The People’s Bank of China set the USD/CNY reference rate at 6.7899, slightly lower than the previous fixing of 6.7928. The adjustment reflected the central bank’s continued management of the Yuan while maintaining stability in the foreign exchange market ahead of significant global monetary policy events.

Key Drivers

• Geopolitical Risks: Geopolitical developments remained secondary to monetary policy considerations.

• US Economic Data: Dollar sentiment continued influencing broader Asian currency markets.

• FOMC Outcome: Investors monitored the Federal Reserve decision for its potential impact on emerging market currencies.

• Trade Policy: China’s currency management remained important for regional trade stability.

• Monetary Policy: The PBOC continued guiding the Yuan through its daily reference rate while balancing domestic economic objectives.

Technical Outlook

• Trend: Neutral

• Resistance: 6.8100

• Support: 6.7750

• Forecast: USD/CNY is likely to remain stable as the PBOC continues managing exchange rate volatility while markets await the Federal Reserve’s decision.

Sentiment and Catalysts

• Market Sentiment: Neutral as investors monitor central bank policy from both China and the United States.

• Catalysts: PBOC policy signals, Federal Reserve decision, Chinese economic data, and regional market sentiment.

Wrap-Up

Financial markets remained in a holding pattern as investors awaited the Federal Reserve’s policy decision, with softer US Dollar sentiment supporting several major currencies. Australia’s weaker-than-expected inflation reinforced expectations for a more accommodative Reserve Bank of Australia, while the Euro and Canadian Dollar benefited from cautious positioning ahead of the FOMC announcement. The British Pound consolidated recent gains, and China’s latest Yuan reference rate reflected the PBOC’s continued efforts to maintain currency stability. Looking ahead, the Federal Reserve’s guidance on interest rates and inflation is expected to be the key catalyst shaping currency markets and broader investor sentiment in the coming sessions.

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Moneta Markets is a trading name of Moneta Markets (Pty) Ltd, an authorised Financial Service Provider (“FSP”) registered and regulated by the Financial Sector Conduct Authority (“FSCA”) of South Africa under license number 47490 and located at 18 Cavendish Road, Claremont, Cape Town, Western Cape, 7708 South Africa. Company Registration Number: 2016 / 063801 / 07. Contact Phone Number: +27 (10) 1429139. Operational Office: 18 Cavendish Road, Claremont, Cape Town, Western Cape, 7708 South Africa.

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Moneta Markets Trading Limited is regulated by the Financial Services Commission (FSC) of Mauritius, with Company No. 211285 GBC and License No. GB24203391. Its registered office is located at Suite 201, 2nd Floor, The Catalyst, 40 Silicon Avenue, Ebene Cybercity, Mauritius.

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