Dollar at Risk as Fed Holds Rates, EUR/USD Sees Potential Rally

The Federal Reserve's (Fed) decision today could have significant implications for the US dollar and global markets. According to ING Think, a consensus view for the FOMC meeting may be a hold, with two dissenters voting for a hike.

This might prevent a material downward correction in rates, but the dollar may still fall as precautionary positioning is unwound and the greenback reconnects with lower oil prices. As a result, EUR/USD may have already bottomed out last week.

ING Think expects a modest dovish Fed surprise to push EUR/USD back into the 1.1400-1.1450 range over the coming days. The current turmoil in the chip sector may cap gains despite improving Middle East headlines.