{"id":38018,"date":"2025-12-31T17:21:52","date_gmt":"2025-12-31T09:21:52","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=38018"},"modified":"2025-12-31T17:21:52","modified_gmt":"2025-12-31T09:21:52","slug":"dollar-firms-after-fed-tempers-cut-expectations","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.com\/en-asia\/analysis\/dollar-firms-after-fed-tempers-cut-expectations\/","title":{"rendered":"Dollar Firms After Fed Tempers Cut Expectations"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"559\" src=\"https:\/\/www.vtmarkets.com\/en-asia\/wp-content\/uploads\/sites\/27\/2026\/03\/usd5-1024x559.png\" alt=\"\" class=\"wp-image-16972\" \/><\/figure>\n\n\n\n<p><strong>Key Points<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The USDX index climbed to a nine-day high of 98.363 after the Fed minutes release.<\/li>\n\n\n\n<li>The Federal Reserve cut rates by 25 basis points this month, but some officials preferred no change.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-dots\" \/>\n\n\n\n<p>The US dollar strengthened on Tuesday, rising to its highest level in over a week against a basket of major currencies after the release of minutes from the Federal Reserve\u2019s latest policy meeting.<\/p>\n\n\n\n<p>The USDX dollar index climbed to a nine-day high of 98.363, as traders reassessed the near-term outlook for US interest rates.<\/p>\n\n\n\n<p>The minutes showed that while the Federal Reserve delivered a <a href=\"https:\/\/t.co\/ya3PFUHFMK\" target=\"_blank\" rel=\"noopener nofollow\" title=\"\">25-basis-point rate cut this month<\/a>, the decision was finely balanced.<\/p>\n\n\n\n<p>Several officials were reluctant to support further cuts in the near future, with some indicating they could have backed leaving rates unchanged.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Fed minutes show officials were in tight split over December rate cut <a href=\"https:\/\/t.co\/vVBSUIH8cl\">https:\/\/t.co\/vVBSUIH8cl<\/a><\/p>&mdash; CNBC (@CNBC) <a href=\"https:\/\/twitter.com\/CNBC\/status\/2006081386948489421?ref_src=twsrc%5Etfw\">December 30, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>This tone contrasted with recent market expectations for a steady easing path and gave the dollar short-term support.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Fed Signals Caution on Pace of Easing<\/h2>\n\n\n\n<p>Although the minutes revealed hesitation around immediate follow-up cuts, most policymakers still agreed that interest rates could fall eventually if inflation continues to decline.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Fed policymakers judged &#39;ample&#39; levels of reserves warranted bill-buying, minutes show <a href=\"https:\/\/t.co\/t81whhzIbK\">https:\/\/t.co\/t81whhzIbK<\/a> <a href=\"https:\/\/t.co\/t81whhzIbK\">https:\/\/t.co\/t81whhzIbK<\/a><\/p>&mdash; Reuters (@Reuters) <a href=\"https:\/\/twitter.com\/Reuters\/status\/2006280437706965114?ref_src=twsrc%5Etfw\">December 31, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>This nuance mattered for markets. It suggested the Fed remains data-dependent rather than committed to a preset easing cycle.<\/p>\n\n\n\n<p>The immediate reaction reflected a recalibration rather than a reversal of expectations. Traders trimmed aggressive rate cut bets, <a href=\"https:\/\/t.co\/PfDm3l8WV3\" target=\"_blank\" rel=\"noopener nofollow\" title=\"\">supporting US yields<\/a> and lifting the dollar, particularly against low-yielding currencies.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Dollar Bounce Sits Within a Broader Downtrend<\/h2>\n\n\n\n<p>Despite the recent uptick, the broader picture for the dollar remains weak. According to LSEG data, the dollar index is still on track to end the year down around 9%. This would mark one of its poorest annual performances in recent years.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">A Bloomberg gauge of the dollar headed for its worst week since June and Treasuries rose as traders looked to data releases due early next month to confirm expectations for further Federal Reserve interest-rate cuts in 2026 <a href=\"https:\/\/t.co\/nsYGOpQ6HB\">https:\/\/t.co\/nsYGOpQ6HB<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/2004584530632429843?ref_src=twsrc%5Etfw\">December 26, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>The contrast between short-term firmness and longer-term weakness highlights the market\u2019s dilemma.<\/p>\n\n\n\n<p>While Fed officials appear cautious about cutting too quickly, traders continue to expect lower rates over time as inflation cools and growth moderates.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Technical Analysis<\/h2>\n\n\n\n<p>The US Dollar Index has seen choppy price action in recent months, with the latest bounce from the <strong>95.81<\/strong> support level offering a modest recovery back toward the <strong>98.00<\/strong> handle.<\/p>\n\n\n\n<p>However, the broader trend remains under pressure, with price action staying below the 30-day moving average and the MACD still in negative territory\u2014signalling weak momentum.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"1280\" height=\"562\" src=\"https:\/\/www.vtmarkets.com\/en-asia\/wp-content\/uploads\/sites\/27\/2026\/03\/495d45ef-5847-493d-8e1a-7e06e0a07065.jpg\" alt=\"\" class=\"wp-image-38022\" \/><\/figure>\n\n\n\n<p>While the recent uptick hints at stabilisation, the index remains stuck in a sideways consolidation range between <strong>97.00\u201399.00<\/strong>, with no clear bullish breakout in sight.<\/p>\n\n\n\n<p>Only a sustained close above <strong>99.00<\/strong> would suggest a stronger recovery heading into Q1 2026.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Cautious Outlook as Data Dependence Dominates<\/h2>\n\n\n\n<p>The dollar may retain some support in the near term as markets digest the Fed\u2019s cautious tone and scale back expectations for rapid easing.<\/p>\n\n\n\n<p>However, with policymakers still open to lower rates if inflation falls, upside in the dollar may remain limited.<\/p>\n\n\n\n<p>Upcoming inflation and labour market data will likely determine whether this rebound has further room to run or fades back into consolidation.<\/p>\n\n\n\n<p>For now, the dollar appears set to trade in a narrow range, balancing short-term policy caution against a softer longer-term rate outlook.<\/p>\n\n\n\n<p><strong>Learn more about trading <a href=\"https:\/\/www.vtmarkets.com\/indices\" target=\"_blank\" rel=\"noopener\" title=\"\">Indices<\/a> on <a href=\"https:\/\/www.vtmarkets.com\/trade-now\" target=\"_blank\" rel=\"noopener\" title=\"\">VT Markets<\/a> today.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The dollar lifts to a nine-day high after Fed minutes show hesitation on near-term rate cuts. &#8211; vtmarkets.com<\/p>\n","protected":false},"author":64,"featured_media":16972,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[31],"tags":[9,11],"class_list":["post-38018","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-dollar","tag-indices"],"acf":{"acf_article_selection_author":""},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/38018","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/64"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=38018"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/38018\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16972"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=38018"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=38018"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=38018"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}