Dollar Weakens as Traders Await Fed Rate Decision and Trump Pushes for Bigger Cuts
The U.S. dollar slipped on Monday as investors prepared for the Federal Reserve’s upcoming meeting. Markets widely expect the central bank to cut interest rates again this week, while President Donald Trump renewed his calls for faster and larger monetary easing.
Trump urged Fed Chair Jerome Powell to deliver a “bigger” cut to benchmark interest rates, highlighting weakness in the housing market ahead of the decision.
According to the CME FedWatch Tool, traders are fully pricing in a 25 basis point cut at the Federal Open Market Committee (FOMC) meeting on September 16–17. There is also a small 5.8% chance of a larger 50 basis point reduction.
Market analysts note that investors remain cautious ahead of the Fed outcome. “We see a lack of conviction, with traders happy to wait on the sidelines until the FOMC results are known,” said Michael Brown of Pepperstone.
The dollar index, which measures the greenback against six major currencies, dropped 0.4% to a six-day low of 97.296 before trimming losses. It last traded 0.2% lower at 97.445. Against the yen, the dollar slipped 0.3% to 147.258, while the euro gained 0.2% to $1.1759.
Despite stabilizing after its record slide earlier this year, the U.S. dollar remains in a bearish trend. Investors are closely watching the Fed’s “dot plot” and Chair Powell’s guidance to assess the pace of future easing. Goldman Sachs analysts expect no major policy shift beyond acknowledgment of softer labor data.
Other central banks, including the Bank of Japan, Bank of England, Bank of Canada, and Norway’s Norges Bank, will also announce decisions this week. Markets anticipate no immediate changes from the BoE and BoJ, though analysts are focused on their forward guidance.
Meanwhile, the euro shrugged off Fitch’s downgrade of France’s credit rating from AA to AA- over rising debt concerns. Analysts said the downgrade was priced in and unlikely to drive sharp losses. Speculative long positions in the euro remain strong, reaching $18.4 billion—the highest in nearly two years.
Sterling rose 0.3% to $1.359, its best level since early July. In cryptocurrencies, Bitcoin extended its decline, slipping 1% to $114,735, marking its third straight session of losses.
