19.02.202601:36:53UTC+00Dollar Holds Gains on Hawkish Fed Hints

The dollar index hovered around 97.7 on Thursday, consolidating gains after a sharp rally in the previous session driven by robust US economic data and unexpectedly hawkish signals from the Federal Reserve. Minutes from the Fed’s latest meeting revealed a divided committee on the future path of interest rates, indicating that the next chair may face obstacles in implementing rate cuts. Several participants even pushed for wording that would have explicitly kept the option of raising the federal funds rate on the table if inflation stayed above target. Traders pared back expectations for monetary easing, now pricing in slightly fewer rate cuts for this year, though they still anticipate two 25-basis-point reductions by year-end. The dollar also drew additional support from data showing US industrial production grew at its fastest pace in nearly a year, core capital goods orders beat forecasts, and housing starts climbed to a five-month high. Investors are now focused on upcoming data releases on Friday—including PCE inflation, PMI, and GDP—for further clarity on the Fed’s policy outlook.