CME FedWatch Tool shows 89% chance of a 25 bps rate cut in July

According to the CME Group's FedWatch Tool, following the FOMC's dovish monetary policy statement, markets are now pricing an 88.9% probability of a 25 basis points Fed rate cut in July compared to 68.5% seen on Tuesday. The odds of the Fed making two 25 basis points rate cuts by September is now 71.3% vs 50.6% yesterday.

The heightened probability of the rate cuts seems to be weighing on the greenback. Following the initial drop to a session low of 97.10, the US Dollar Index recovered modestly and was last seen down 0.4% on the day at 97.25 as investors are now waiting for Chairman Powell to deliver his remarks on the policy outlook.