To keep things short, they tried to leave the door open for September but as evident in the language and from Powell's press conference, they are not going to push for it. I'd put emphasis on the word 'tried' in the description above. Powell himself alluded to data dependency and he just reaffirmed market expectations by saying "we could hike in September but at the same time, we could also hold rates unchanged".

Fed funds futures curve

The change in the Fed funds futures curve has been relatively minor as evident above. But given that the Fed is not pushing back against market pricing, it means that traders are well within their rights to keep to the thinking that the top is in.

The first full rate cut is priced in for May next year, with growing expectations of a move potentially in March. But I'd rather say we'll cross that bridge when we get to it. The thing now is to be watchful of when exactly will we see a clear pivot point in the Fed in terms of policy. As mentioned yesterday:

"The big question now for the Fed isn't about one or two more rate hikes. It is whether we are going to see them actually push for 6% rates or if the next two to three meetings is where the peak comes in on interest rates.

A lot of that will be data-dependent of course but essentially markets will trade and react based on the Fed's view and outlook accordingly. At this juncture, they're sort of sitting right in the middle. But eventually, they will have to pick a lane and stick with that direction."

So, how has this impacted the dollar?

The greenback is lower across the board in reaction as traders need to account for the possibility that the terminal rate is already here for the Fed.

But keep in mind that if the Fed is able to stick with its view of holding rates higher for longer, rate differentials are very much favouring the dollar right now. And given how economic conditions are faring in Europe and the UK, things in the US are actually looking pretty decent.

Those are some factors that could limit the dollar downside in the big picture.

As for the technicals, it is mainly just stopping the dollar rebound from last week. But we're still well in the range of battling it out between buyers and sellers at this juncture. USD/JPY is an interesting one though, with the pair now falling back below 140.00 amid fears that the BOJ might surprise with a policy tweak as well on Friday:

USD/JPY daily chart

The fall back below 140.00 could have room to roam further, with the 100-day moving average (red line) only seen at 137.33 - just above the monthly low of 137.23. But let's wait on the BOJ before getting too carried away.