The U.S. dollar moved lower on Thursday after the Federal Reserve cut interest rates at the final policy meeting of the year. The central bank also signaled that more easing is likely in 2026, adding pressure to the greenback.
At 04:25 ET (09:25 GMT), the Dollar Index traded 0.1% lower at 98.682. Earlier in the session, it touched its weakest level since late October.
Dollar Slips After the Fed Decision
The Fed lowered rates by 25 basis points on Wednesday, marking the third cut of the cycle. The move was widely expected. However, comments from Chair Jerome Powell were more balanced than analysts anticipated, reducing expectations of a more hawkish stance.
Policymakers also projected one additional rate cut next year. Yet the Fed remains divided over the December decision, suggesting more uncertainty ahead.
Analysts at ING, including James Knightley and Padhraic Garvey, noted that incoming changes and a cooling job market increase the chances of deeper easing in the months ahead.
Markets are also focused on the delayed November jobs report, due next week. Another major spotlight is President Donald Trump’s upcoming decision on who will replace Powell when his term ends in May. Reports suggest that White House economic adviser Kevin Hassett is the leading candidate. Hassett has supported a faster pace of rate cuts, but it remains unclear whether he can secure enough support from Fed officials.
Euro Set for Weekly Gains
EUR/USD dipped 0.1% to 1.1689, yet the euro is still on track for weekly and monthly gains. Signs of improving economic conditions in the eurozone continue to support the currency.
ING analysts noted that markets have removed expectations for another ECB rate cut. However, they cautioned that it is still too early to price in rate hikes for 2026. They expect EUR/USD to remain in the high 1.16 range. A move toward their 1.1800 year-end target could require softer U.S. labor data or upgraded ECB growth forecasts.
Elsewhere, GBP/USD fell 0.2% to 1.3357. USD/CHF edged 0.1% lower to 0.7995 after the Swiss National Bank kept rates unchanged at 0.0%, as expected.
Australian Employment Declines
In Asia, AUD/USD dropped 0.4% to 0.6647. The Australian Bureau of Statistics reported a loss of 21,000 jobs, with a sharp decline in full-time roles. The unemployment rate held steady at 4.3%.
This weaker labor data complicates the Reserve Bank of Australia’s outlook, especially with inflation pressures still persistent.
USD/CNY slipped 0.1% to 7.0574, while USD/JPY moved 0.1% lower to 155.83 as both currencies benefited from overall dollar weakness.
