Fed Holds Rates Steady at 3.5%-3.75%, USD Softens Amid Cautious Outlook

The US Federal Reserve’s Federal Open Market Committee (FOMC) maintained the federal funds target range at 3.5%-3.75% in July 2026, signaling a cautious stance on inflation. According to Societe Generale, the Fed’s decision reflects a measured approach amid ongoing economic uncertainties.

Following the announcement, the US Dollar experienced a modest weakening. TD Securities attributed this softness to the Fed’s decision to hold rates steady combined with Chair Warsh’s lack of hawkish guidance. Meanwhile, ING noted that the EUR/USD pair saw a slight rebound, although gains were limited by higher long-term US Treasury yields and continued pressure on US growth stocks.

For Japanese investors, the Fed’s cautious tone and stable rates in Q3 could influence yen-dollar dynamics and risk sentiment, particularly in cross-asset markets where US policy remains a key driver.