The US Dollar is holding steady as the Federal Reserve chooses to keep interest rates between 3.5% and 3.75%. Market attention is on Jerome Powell’s upcoming press conference for updates on policy changes and the ongoing investigation by the Department of Justice. Interest rates play a key role in a country’s currency value. Higher rates usually attract more investment from around the world, which strengthens the currency. They also impact gold prices, as higher rates make it costlier to hold gold. The Fed funds rate is crucial for guiding US monetary policy.

Federal Reserve Meetings

The Federal Reserve meets eight times a year to discuss interest rates, aiming for a 2% inflation rate and full employment. Their decisions heavily influence the US Dollar, as changes in rates lead to money moving in and out of the country. Gold prices have jumped above $5,500 due to geopolitical tensions and economic uncertainty. Fidelity is launching its first stablecoin on the Ethereum blockchain. Additionally, the Bittensor cryptocurrency is gaining momentum, with more interest in TAO tokens. The Federal Reserve kept interest rates steady at 3.75%, which was widely expected. The real focus in the coming weeks will be the political pressure on Fed Chair Powell and any shift in his tone. This uncertainty may lead to increased market volatility, providing options traders with opportunities. This pause in rate changes reflects cooling inflation, with the December 2025 Consumer Price Index (CPI) at 3.1%. The job market is also softening, with Non-Farm Payrolls adding only 160,000 jobs, fewer than expected. This data allows the Fed to wait but also raises expectations for rate cuts later this year.

Market Implications

For traders, this indicates a potentially weaker US Dollar in the medium term. We’re looking at buying call options on currency pairs like GBP/USD, which is nearing four-year highs. It’s crucial to watch for any hints from Powell about possible rate cuts in late 2026, as that would likely speed up this trend. Gold’s sharp rise above $5,500 is a direct response to current conditions. A Fed that holds rates steady makes non-yielding assets like gold more appealing, especially amid ongoing geopolitical risks. We recommend considering call options on gold futures to ride this strong trend. The political investigation into Chair Powell adds a level of unpredictability we haven’t seen in decades. This indicates that buying volatility, perhaps through options on the VIX, could be a smart strategy. An unexpected comment from the press conference could lead to significant market movement. We experienced a similar situation in 2023 when markets anticipated a Fed policy shift that took longer to materialize than expected. This created unstable market conditions for months. It serves as a reminder that timing these policy changes is tricky, and traders should handle their risks carefully. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now