On April 30, Eastern Time, the Federal Reserve's monetary policy committee (FOMC) decided to keep the target range for the federal funds rate unchanged at 3.50% to 3.75%. Following three consecutive rate cuts at the end of last year, the FOMC has now held rates steady in its three policy meetings so far this year. Senior Fed reporter Nick Timiraos noted that the latest decision revealed deeper divisions within the Fed regarding whether to signal the possibility of future rate cuts. With four out of twelve voting members dissenting, this meeting marked the highest number of opposing votes in a Fed policy meeting since 1992. Media analysis suggested the voting outcome reflected a clear split in two opposing directions: some members still advocated for rate cuts, while three others opposed retaining what is referred to as an "easing bias"—a stance the Fed has maintained over the past two years, implying a higher likelihood of rate cuts than hikes. Commentary indicated that the wording of the meeting statement did not explicitly convey an easing bias and avoided direct mention of rate cuts.
In a separate research note, China International Capital Corporation (CICC) stated that the Fed's decision to hold rates steady in April was in line with market expectations. However, with four officials voting against the decision—three of whom opposed including language suggesting an easing bias—it signals a more cautious monetary policy stance. Rising oil prices due to Middle East tensions, combined with earlier tariff effects, have complicated the inflation outlook. As supply-side shocks transition from sporadic events to a new normal, the room for policy easing has narrowed, raising the bar for future rate cuts. This meeting also marked the final rate-setting meeting under Chair Powell's leadership. While his successor, Warsh, has hinted at the possibility of "balance sheet reduction and rate cuts," the collective decision-making mechanism of the committee may hinder near-term action. CICC believes the likelihood of a Fed rate hike this year is low, but the path to rate cuts will be prolonged, with the next cut potentially delayed until the fourth quarter.
Key data releases to watch today include the Eurozone's April harmonized CPI year-on-year, preliminary quarter-on-quarter GDP growth for the first quarter, March unemployment rate, the U.S. preliminary annualized GDP growth for Q1, initial jobless claims for the week ending April 25, Canada's monthly GDP for February, and the U.S. Chicago PMI for April. Additionally, the European Central Bank and the Bank of England will announce their interest rate decisions later in the day, which will be closely monitored.
**USD Index** The U.S. dollar index edged higher yesterday, closing with modest gains and currently trading around 98.90. The uptick was supported by fading optimism over Middle East peace talks, which revived safe-haven demand for the dollar. The Fed's decision to maintain rates and the further postponement of rate cut expectations also contributed to the dollar's strength. Positive U.S. economic data released during the session provided additional support. Resistance is seen near 99.50, while support lies around 98.50.
**EUR/USD** The euro declined slightly yesterday, closing lower and currently trading near 1.1680. The dollar's strength, driven by solid economic data, renewed safe-haven demand, and delayed Fed rate cut expectations, weighed on the euro. Weak economic data from the Eurozone also added downward pressure. Resistance is expected around 1.1750, with support near 1.1600.
**GBP/USD** The British pound also fell yesterday, closing lower and trading around 1.3480. A strengthening U.S. dollar, supported by the Fed's steady policy and delayed rate cut expectations, was the main factor pressuring the pound. However, lingering expectations of a Bank of England rate hike limited the downside. Resistance is seen near 1.3550, while support is around 1.3400.
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