While the US dollar has been sliding sharply, today's Federal Reserve decision may help it recover partly.

The Fed is expected to keep interest rates unchanged with broad support from officials. However, Chair Jerome Powell may seek to refocus attention on growth momentum and inflation risks.

Powell's first post?subpoena news conference will inevitably include questions about political pressure, central?bank independence, and what he plans to do after his term as chair ends in May.

As noted above, a decision to hold rates this month is likely to gain wide backing among officials after a series of controversial cuts. While a majority supported easing to offset a weakening labour market, another group insisted that the priority remains containing high inflation. Given the dollar's recent sharp fall, risks of renewed price pressure are likely to move to the fore.

Since September 2024, the Fed has cut the policy rate by 1.75 percentage points, bringing it to a range of 3.50%–3.75%. Although the labour market cooled materially over the past year, the unemployment rate fell to 4.4% in December 2025 from 4.5% in the prior month, signaling some stabilization. Inflation is slowing but remains well above the Fed's 2% target.

Economists expect only modest tweaks to the Fed's post?meeting statement. Officials may adjust their assessment of the labour market to reflect the recent decline in unemployment. They may also note stronger?than?expected growth in the second half of last year, a view that would support the dollar in the near term.

Holding the policy rate steady this month will face some internal resistance. Fed official Steven Miran, who has pressed for larger cuts at the past three meetings, may repeat that call this week. Michelle Bowman may also signal dissent after saying earlier this month that the Fed should be ready to cut.

In any event, today's decision will be reflected in currency markets. A dovish tone from the Fed would help the dollar recover. If the statement proves more dovish than markets expect, the dollar's rapid decline is likely to continue.

A technical outlook for EUR/USD suggests that buyers should consider reclaiming 1.2030. That would open the way to test 1.2080. From there, a move to 1.2140 is possible, although advancing beyond that without support from major players would be difficult. The extended target is 1.2170. On a decline, meaningful buying interest is likely around 1.1970. If buyers do not appear there, it would be wise to wait for a new low at 1.1935 or to open long positions from 1.1900.

As for GBP/USD, buyers need to take the nearest resistance at 1.3820. Only that will allow them to target 1.3865, above which a breakout would be challenging. The extended target is around 1.3910. If the pair falls, bears will try to seize control at 1.3785. If they succeed, a break of that range would deal a serious blow to bullish positions and could push GBP/USD down to 1.3745 with scope to extend to 1.3710.