US Dollar Trades Firm Against FX Majors after Rates Cut
The US dollar trades firmer against major trading partners in the forex markets, gaining on the day after the Federal Reserve’s first rate cut last week.
The EURUSD pair opened Monday’s session with a deeper slide to the lower levels of a short-term descending channel. The pair briefly dipped closer to $1.17 before shooting just a bit higher to float at $1.1750.
The greenback launched into a fresh rally right after the Federal Reserve trimmed interest rates last week.
During the early trading session on Monday, the U.S. dollar was steady as traders looked ahead to a slew of speeches from Federal Reserve officials throughout the week that could provide further clues on the U.S. rate outlook, after the central bank resumed its easing cycle last week.
The yen was last 0.16% lower at 148.22 per dollar, paring its gains from Friday after a hawkish shift in the Bank of Japan’ s rhetoric raised the prospect of a near-term rate hike.
Sterling, meanwhile, fell to a two-week low of $1.3458, pressured by domestic headwinds after a surge in UK public borrowing and a BoE rate decision that laid bare the challenge for policymakers in balancing growth and inflation.
FX analysts said the US dollar rally could be viewed as long-term positioning for rates that are expected to move lower, but not too low that they’d make the dollar a bad investment.
“We have pushed our forecast for the next move into 2026,” Jane Foley, head of FX strategy at Rabobank, said of the BoE’s next expected cut.
“However, with this mostly already priced in and with the attentions of GBP investors squarely focused on the UK fiscal backdrop, we remain of the view that GBP is set to be on the back foot into the autumn and potentially beyond.”
In the broader market, the dollar extended its rebound from last week’s knee-jerk fall following the Fed’s rate cut, rising slightly against a basket of currencies to 97.75.
The euro was down 0.07% to $1.1738, while the Aussie eased 0.02% to $0.6589. Roughly 10 Fed officials, including Chair Jerome Powell, are due to speak this week, with investors watching closely for their views on the economy and the Fed’s independence.
Markets anticipate that the speeches will provide guidance on the forex market outlook. #US Dollar Trades Firm Against FX Majors after Rates Cut Rates Mix as Inflows to States Boost Liquidity to N2.87trn
