Key Points
- Dollar index (USDX) held around 98.85, easing slightly after Wednesday’s surge.
- Fed Chair Powell signalled another rate cut in 2025 is not guaranteed.
- Traders trimmed rate-cut odds to below 70% for December.
The US dollar index remained firm on Thursday, trading just below the 99 level after the Federal Reserve’s quarter-point rate cut and Chair Jerome Powell’s cautious comments prompted a reassessment of the policy outlook.
Fed Outlook and Market Reaction
As expected, the Fed reduced its benchmark interest rate by 25 basis points, bringing the target range to 3.75%–4.00%. The Fed also announced that it will end its balance sheet runoff on December 1.
However, Powell’s post-meeting remarks struck a less dovish tone, with the Chair highlighting policy divisions among members and cautioning that another cut this year was far from certain.
The hawkish stance triggered a rally in the greenback late Wednesday as traders pared back rate-cut expectations, with money markets now pricing less than a 70% probability of another reduction by December.
Trade and Global Focus
With the Fed decision behind them, traders turned their focus to the Trump–Xi meeting in South Korea later in the day, where the two leaders are expected to formalise a limited trade truce following months of tariffs and strained diplomatic ties.
Markets are also watching whether any statement addresses technology export controls or Chinese rare earth exports.
Technical Analysis
The U.S. Dollar Index (USDX) slipped 0.09% to 98.85, pausing after a modest recovery seen earlier this month.
The greenback continues to trade in a narrow range between 98.50 and 99.00, reflecting trader caution ahead of key U.S. macroeconomic data and fresh commentary from Federal Reserve officials.
From a technical perspective, the dollar remains in a sideways consolidation pattern after rebounding from its October low of 95.82. The 5-, 10-, and 30-day moving averages are converging just below the 99.00 level, suggesting indecision and a lack of clear directional momentum.
A decisive breakout above 99.00 could open the way toward 100.00, while failure to hold above 98.50 may see the index retest support near 97.80.
The MACD indicator shows neutral momentum, with both the MACD and signal lines flattening around the zero axis. The histogram’s muted profile confirms that neither bulls nor bears currently hold dominance.
Fundamentally, traders remain hesitant to take large positions before upcoming U.S. employment and inflation data, which could reshape rate-cut expectations for early 2026. Softer figures could pressure the dollar as markets price in earlier easing, while stronger readings may revive bullish momentum.
In summary, the USDX is steady but lacks conviction, consolidating below the psychological 99.00 resistance. A breakout on either side of the current range will likely define the next directional move, with market focus firmly on economic data to provide clarity.
Outlook
The dollar is likely to remain range-bound ahead of Friday’s US employment data and the outcome of the Trump–Xi summit. While the Fed’s policy stance supports a firm greenback, any signs of progress on trade or softer inflation readings could temper bullish momentum in the coming sessions.
