Yushin Bank: Dollar could benefit slightly if Fed chooses to cut rates by 25bps

The Fed could cut interest rates by 25 basis points next week instead of 50, which would benefit the dollar but have little impact, said Robert Mialich, FX strategist at Yusen Bank.Mialich said a 25-basis-point cut would mean that the Fed doesn't intend to loosen policy in a big way, which could prevent the dollar from falling further but is unlikely to spark a strong recovery. ‘The euro will probably continue to trade above 1.10 against the dollar,’ he said. However, if the Fed cuts rates by 50 basis points, the pair could break above 1.12, as that would suggest the US economy is worse than the data suggests.