• The US Dollar recovers on Thursday after its brief moment of weakness on Wednesday. 
• Traders were surprised by the dovish Fed, which continued to anticipate three rate cuts this year.
• The US Dollar Index fell to the lower end of 103.00 before staging a rebound. 

The US Dollar (USD) is entering a patch of volatility after markets got caught by surprise on Wednesday when the release of the Fed monetary policy decision revealed that the Federal Open Market Committee (FOMC) is still committed to cut interest rates three times this year. Markets had already repriced their stance to just two cuts ahead of the Fed event. The repricing of the Fed statement resulted in ample US Dollar weakness, with equities rallying substantially higher. 

On the economic data front, Thursday’s points could not come at a better time. With the preliminary Purchasing Manager Index (PMI) numbers to be released, markets can get confirmation if the Fed is right to stick to three cuts. A continuing strong economy could result in the Fed tuning down its rate cut expectations to only two or one cut in order to keep control of inflation as firm demand tends to fuel inflation.