Greenback Rises After FOMC Decision, Powell to Remain at Fed
The US dollar advanced after the Federal Reserve held interest rates steady in line with market expectations, while Chair Jerome Powell signaled he intends to remain at the central bank even after stepping down from his leadership role.
The US Dollar Index (DXY) rose to 99.05 following the Federal Open Market Committee (FOMC) decision on Wednesday (April 29). Investors welcomed both the policy outcome and Powell's commitment to stay within the institution.
The Federal Open Market Committee voted 8-4 to keep the benchmark interest rate unchanged at 3.50%-3.75%. The narrow margin marked the closest vote since 1992, underscoring growing divisions within the committee ahead of the leadership transition.
Powell's term as Chair of the Federal Reserve is set to end on May 15, 2026, when Kevin Warsh is expected to take over. However, Powell indicated he will continue serving as a member of the Board of Governors for an unspecified period.
He noted that recent economic developments had influenced his decision to remain, emphasizing the importance of preserving central bank independence from political pressure—a key factor in maintaining policy credibility and public trust.
Meanwhile, the US Senate is widely expected to approve Warsh's nomination in the near term. Although markets had previously viewed Warsh as leaning dovish due to his perceived proximity to Donald Trump, he pushed back against that characterization during last week's confirmation hearing.
As a result, investors have begun scaling back expectations for aggressive rate cuts under Warsh's leadership—particularly if Powell continues to exert influence within the FOMC. This shift in outlook has provided additional support for the dollar.
Safe-Haven Demand Adds Momentum
The greenback also drew strength from renewed risk-off sentiment amid a surge in crude oil prices. Brent crude oil climbed back toward record highs near $120 per barrel, driven by escalating tensions between the United States and Iran as well as ongoing dynamics within OPEC.
According to Axel Merk, rising oil prices tend to push bond yields higher without a corresponding increase in long-term inflation expectations. This dynamic effectively tightens financial conditions and lifts real interest rates, offering further support to the US dollar while weighing on other major currencies.