The US dollar is gradually declining against major currencies in the Forex market amid domestic developments and expectations that the Federal Reserve will pause interest rate hikes through the end of the current year.

Today, Wednesday, the market is continuing the trend that began at the start of this week. The main factor remains expectations surrounding the US Federal Reserve's October monetary policy meeting, which will take place next week.

Although this topic has become tiresome for market participants, it remains the dominant issue and has a direct and significant impact on asset price movements.

A closer look at market dynamics shows that virtually all markets are trading within sideways ranges. Even oil, which has reacted sharply to developments in the Middle East, remains confined to a similar price range. In the Forex market, the US dollar is gradually weakening against major currencies. Expectations surrounding the outcome of the Federal Reserve's monetary policy meeting and domestic developments in the countries whose currencies are traded against the dollar are the main drivers. For example, the British pound is receiving support from rising inflation in the United Kingdom, where the annual inflation rate increased from 3.1% to 3.5%. Similar problems are evident in Australia and other Western countries.

Against this backdrop, the British pound may continue to appreciate against the US dollar and several other currencies if the Federal Reserve decides, as expected, to leave interest rates unchanged following its two-day meeting. Federal funds rate futures clearly reflect this expectation, indicating an 85.1% probability of such an outcome.

What Can Be Expected in the Markets Today?

Most likely, the major asset classes will continue to consolidate. Gold prices are currently declining, but the metal remains within a relatively narrow trading range. A similar pattern can be observed in the crude oil market.

Overall, a review of broader market dynamics reveals little significant activity. The markets will most likely continue to move sideways through the end of the current week. The main potential trading opportunity may be to buy currencies against the US dollar.

Forecast for the Day:

GBP/USD

The pair is receiving support and could rise toward 1.3455 as higher inflation in the UK increases the likelihood of an interest rate hike by the Bank of England. The 1.3398 level could serve as a potential entry point for a long position. A stop-loss could be placed at 1.3353.

AUD/USD

The pair is receiving support. It has broken above the 0.7015 resistance level and could rise toward 0.7068. The 0.7030 level could serve as a potential entry point for a long position. A stop-loss could be placed at 0.7003.