The dollar is weaker on the data, not the dots.
DXY has drifted off the March highs while OIS-implied policy is little changed. The slide is in the activity prints, not the Fed reaction function.
DXY 99.03 · EUR/USD 1.1648 · US10Y 4.46%
The US Dollar Index is trading around 99.03, off the March highs above 100 but well within its 2026 range. On the week the index is -0.30%, and +0.57% on the month. What is striking is not the size of the move. It is that the dollar has drifted lower while the rates curve has not moved much at all. The cuts the market expects later this year are essentially where they were before the April meeting. The dollar's slide is in the data, not the dots.
What the April meeting actually showed
The April 28-29 FOMC held the target range at 3.50-3.75 percent. The headline was not the hold. It was the 8-4 vote, the most dissents in a Fed decision since October 1992. Two voters wanted to cut. Two wanted to stay on a tighter trajectory than the Summary of Economic Projections implied. The split is wide enough to make the framing matter as much as the decision: a Committee that is no longer speaking with one voice.
That matters for the dollar because the institution that normally anchors short rates is doing so with less conviction. The path priced by OIS for the rest of the year is little changed from mid-March. Both the doves and the hawks failed to move the consensus. The market kept its existing call.
The data side is where the dollar moved
The activity surprise index has rolled over for the US relative to the rest of the G10, and the gap has widened over the last month. ISM manufacturing's new-orders sub-index is below the expansion line on a three-month average. Initial claims have crept above their year-to-date average. Headline payrolls have held, but the prior two months have been revised down meaningfully.
On the inflation side, the goods read is no longer a tailwind. Services ex-shelter, the Fed's preferred read on demand-driven prices, has continued to cool. That is the print pattern that supports holding rates without needing to talk hawkish. It is also the pattern that weighs on the dollar through the growth-differential channel.
And the dollar's other story: oil and the safe bid
Two extra things have been quietly helpful for the rest of G10. Brent has dropped from above $107 in late April to the mid-90s, removing the energy-trade dollar bid that built earlier in the spring. And the geopolitical risk premium that had supported the dollar through the early-2026 episode has come out. Neither shows up in dots. Both show up in the DXY.
What would change the read
The cleanest test is the next payrolls and ISM Services release. A payrolls number with positive revisions and a services new-orders rebound would close the relative growth gap. The dollar would not need the dots to do anything. It would just need the data to stop softening.
The other variable is leadership. Chair Powell's term ends 15 May, and the June 16-17 meeting will be the first under a new Chair. A framing change at the new Chair's debut press conference is the largest near-term risk to a dollar that is currently pricing continuity.
What to watch
- US growth surprise index, 3-month, vs euro-area composite
- ISM Services new orders, the cleanest leading read
- OIS-implied policy path through the June 16-17 meeting
- Brent vs DXY, the rolling 30-day correlation has flipped sign
- EUR positioning: see our positioning piece