Volatility Expected in Forex Market Amid Rate Decisions

s traders prepare for the critical CPI report, heightened volatility is anticipated in the Forex market. The recent interest rate cut by the Federal Reserve has set the stage for significant currency movements based on the inflation data released in the CPI report. Market participants are particularly focused on how this report will shape the Fed's future monetary policy, which, in turn, will affect the strength of the U.S. dollar. If inflation remains persistently high, the Federal Reserve may opt to maintain its current rates longer, leading to upward pressure on the dollar, particularly against currencies like the Japanese yen. Conversely, a significant drop in inflation could lead to further rate cuts, weakening the dollar and benefiting currencies from risk-sensitive economies, such as the Australian and New Zealand dollars.