Fed Chair Jay Powell had already indicated in the last meeting: The Federal Open Market Committee (FOMC) is currently deeply divided in terms of the timing of further rate cuts. This has become more than clear through the recent statements of various members. A significant number of central bankers have positioned themselves clearly regarding a rate cut in December, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen notes.

DXY resistance at 100.25–100.35 may hold

"For one, there is New York Fed President John Williams, who has openly expressed his support for a rate cut in December. Williams is not only a distinguished economist, adding weight to his voice in monetary policy decisions, but he also brings extensive experience from his tenure as President of the San Francisco Fed prior to his current role in New York."

"Another key figure is William's colleague, Stephen Miran, who is a close ally of US President Trump. Miran has already signaled that he would vote in favor of a rate cut of "only" 25 basis points (instead of 50 basis points as in the two previous meetings), if that is necessary to achieve a majority for the rate cut. Along with governors Christopher Waller and Michelle Bowman, who had been early advocates of easing monetary policy, there already seems to be a majority within the seven-member Board of Governors for a December rate cut. Consequently, the market has begun to price in a higher probability of such a move since Friday."

"Nonetheless, the US dollar ended the past week at stronger levels. My colleague Michael already warned on Friday not to focus too much on the December rate decision. After all, it’s not about the next one or two months, but about the medium-term interest rate path – something that the fx market appears to be taking into account with its measured response. Does this mean that the Fed’s December meeting could be a non-event for the dollar? Far from it! After all, new projections are set to be released, which could show a shift in interest rate expectations among individual FOMC members and provide insights into the medium-term interest rate trajectory. The potential for significant USD fluctuations by year-end thus remains high."