--- title: "The US dollar experienced its largest decline in two weeks. Analysts: This round of the upward cycle may have peaked" type: "News" locale: "en" url: "https://longbridge.com/en/news/294270140.md" description: "The Federal Reserve has maintained interest rates for the fifth consecutive time, and the market has lowered its expectations for a rate hike in September. The US dollar experienced its largest decline in two weeks on Wednesday, with the Bloomberg Dollar Spot Index falling by about 0.3%. Federal Reserve Chairman Jerome Powell views the rise in US Treasury yields as a substitute for tightening, alleviating the urgency for short-term rate hikes. Although three officials internally support a rate hike, the market expects that this round of rate hike cycle may have peaked, leading to a decline in the dollar against most major currencies" datetime: "2026-07-29T22:00:00.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/294270140.md) - [en](https://longbridge.com/en/news/294270140.md) - [zh-HK](https://longbridge.com/zh-HK/news/294270140.md) --- # The US dollar experienced its largest decline in two weeks. Analysts: This round of the upward cycle may have peaked According to the Zhitong Finance APP, after the Federal Reserve maintained interest rates for the fifth consecutive time, the market lowered its expectations for a rate hike in September, and the dollar recorded its largest decline in two weeks on Wednesday. Although three officials from the Federal Open Market Committee (FOMC) voted in favor of a rate hike, the market believes that Federal Reserve Chairman Waller views the recent rise in U.S. Treasury yields as part of monetary policy tightening, which alleviates short-term rate hike expectations. After the Federal Reserve announced its interest rate decision, the Bloomberg Dollar Spot Index fell about 0.3%, marking the largest single-day decline since July 15, and it was also the weakest performance of the dollar following the Fed's decision to maintain interest rates in nearly two years. The dollar weakened against most major currencies, with the Norwegian krone rising about 0.8%. In addition to the dollar's weakness, the renewed tensions in the Middle East pushed international oil prices higher, providing support for oil-exporting countries' currencies. Market trends further expanded after Waller's press conference. Waller stated that since the last monetary policy meeting, U.S. Treasury yields have risen significantly, indicating that financial markets have effectively completed part of the tightening that would have required a rate hike from the Federal Reserve. This statement was interpreted by the market as a reduction in the urgency for further rate hikes in the short term. Yusuke Miyairi, a foreign exchange strategist at Nomura Securities in London, stated that Waller effectively views the recent rise in U.S. Treasury yields as a substitute for a rate hike, which is weakening market expectations for further rate increases and putting pressure on the dollar. The interest rate derivatives market also reflects changes in expectations. Before the monetary policy meeting, amid rising energy prices due to the Iran war, traders generally believed there was about a one-third probability of a rate hike at this meeting. However, by the close on Tuesday, the market had almost fully priced in expectations for a September rate hike. After the decision was announced, expectations for a September rate hike dropped to just above 50%, with the market anticipating that the Federal Reserve would not complete this round of rate hikes until December. However, the hawkish signals released internally by the Federal Reserve still attract market attention. At this meeting, three regional Fed presidents voted in favor of a 25 basis point rate hike, while the FOMC ultimately decided to maintain the federal funds rate target range at 3.5% to 3.75% with a vote of 9 to 3, and reiterated in the statement that it would continue to "achieve price stability." Bob Michele, Chief Investment Officer and Global Head of Fixed Income at JP Morgan Asset Management, stated that compared to the decision to maintain interest rates, the three dissenting votes are more noteworthy for the market, indicating that the Federal Reserve is gradually shifting towards supporting further policy tightening, and pressure for future rate hikes may persist. Jim Bianco, President of Bianco Research, also believes that the dissenting opinions of the three officials are the most important message from this meeting. In the context of Waller reducing forward guidance and downplaying hints about future policy paths, the press conference reflects more of the chairman's personal views rather than the consensus of the entire FOMC, thus the voting results of the committee members better reflect the true stance within the committee KPMG Chief Economist Diane Swonk also stated that the three dissenting votes were not coincidental, indicating that some Federal Reserve governors may have begun preparing to support further interest rate hikes in the future. Asset prices fluctuated sharply after the decision was announced. U.S. stocks briefly rebounded; U.S. Treasury yields dipped before quickly rebounding, with the 10-year Treasury yield rising back to around 4.63%. Notably, after Waller's speech, the 30-year U.S. Treasury yield briefly reached its highest level since 2007, reflecting the market's continued vigilance regarding long-term inflation and fiscal financing pressures. Although the dollar fell significantly on Wednesday, analysts believe its long-term trend still depends on the performance of the U.S. economy and inflation. Nathan Thooft, Senior Portfolio Manager at Manulife Investment Management, stated that the decision not to raise rates was enough to drive a roughly 0.5% adjustment in the dollar, but in the longer term, the current cycle of dollar appreciation may have peaked, although the subsequent decline is expected to be relatively slow rather than a rapid drop ### Related Stocks - [NMR.US](https://longbridge.com/en/quote/NMR.US.md) - [8604.JP](https://longbridge.com/en/quote/8604.JP.md) - [JPM.US](https://longbridge.com/en/quote/JPM.US.md) - [MFC.US](https://longbridge.com/en/quote/MFC.US.md) - [JPM-M.US](https://longbridge.com/en/quote/JPM-M.US.md) - [JPM-C.US](https://longbridge.com/en/quote/JPM-C.US.md) - [JPM-D.US](https://longbridge.com/en/quote/JPM-D.US.md) - [JPM-L.US](https://longbridge.com/en/quote/JPM-L.US.md) - [8634.JP](https://longbridge.com/en/quote/8634.JP.md) - [JPM-K.US](https://longbridge.com/en/quote/JPM-K.US.md) - [JPM-J.US](https://longbridge.com/en/quote/JPM-J.US.md) ## Related News & Research - [Will they or won't they? The case for and against a Fed rate hike](https://longbridge.com/en/news/294230315.md) - [Here's what markets are now saying about Fed rate hikes this year](https://longbridge.com/en/news/293876683.md) - [JPMorgan brings forward Fed rate hike call to December after July hold](https://longbridge.com/en/news/294309337.md) - [Fed Keeps Rates Unchanged at July Meeting as Wall Street Interprets Warsh’s Views](https://longbridge.com/en/news/294324540.md) - [US Treasury yields soar as market struggles to interpret Fed](https://longbridge.com/en/news/294339648.md)