The Fed is expected to hold rates steady due to firm jobs and inflation uncertainty. Despite pressure from President Trump, the market sees no chance of a rate cut in July. Tariffs are expected to impact inflation in the coming months. The Fed may wait to see more data before making any moves.

Interest rates are likely to be cut later this year due to weakened consumer confidence and stalled spending. Most job growth has been in certain sectors, while other key sectors have seen slower growth. Inflation may drop back to lower levels later this year, and housing costs could decrease inflationary pressure.

The market anticipates a potential rate cut in December, not September, due to tariff impacts on inflation. President Trump may seek a more dovish Fed Chair. The dollar may receive support from the Fed’s stance on rates and strong job market data.

The dollar may benefit from firmer short-term US rates and a delay in the Fed’s easing cycle. The dollar could strengthen against low-yielding currencies, especially if trade deals are reached. USD/JPY may reach 150, while EUR/USD could correct to 1.15/16. Commodity currencies may outperform if tariff threats persist.

Read more at Investing.com: Fed to Hold the Line, but Cuts Are Coming