{"id":36541,"date":"2025-12-11T10:43:16","date_gmt":"2025-12-11T02:43:16","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=36541"},"modified":"2025-12-11T10:43:16","modified_gmt":"2025-12-11T02:43:16","slug":"dollar-drops-after-fed-signals-dovish-lean","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.com\/en-ca\/analysis\/dollar-drops-after-fed-signals-dovish-lean\/","title":{"rendered":"Dollar Drops After Fed Signals Dovish Lean"},"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-ca\/wp-content\/uploads\/sites\/13\/2026\/03\/image_fx_-2025-03-28T114103.832-1024x559.png\" alt=\"\" class=\"wp-image-19471\" \/><\/figure>\n\n\n\n<p><strong>Key Points:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Dollar Index slides to 98.18 following dovish tone at FOMC meeting<\/li>\n\n\n\n<li>Markets now expect two rate cuts in 2026 versus Fed\u2019s single-cut projection<\/li>\n\n\n\n<li>MACD momentum weakens as 98.00 support faces renewed pressure<\/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 extended its decline on Thursday after the <strong>Federal Open Market Committee (FOMC)<\/strong> delivered a policy outlook that leaned more dovish than markets anticipated.<\/p>\n\n\n\n<p>While the <strong>Fed lowered rates by 25 basis points<\/strong> as expected, it was the accompanying commentary and Chair Jerome Powell\u2019s post-meeting tone that triggered a wave of dollar selling and fresh bets on risk assets.<\/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 Chair Jerome Powell said the current overshooting of the central bank&#39;s 2% inflation target is mostly the result of President Trump&#39;s import tax hikes <a href=\"https:\/\/t.co\/A4Jgod7jBW\">https:\/\/t.co\/A4Jgod7jBW<\/a> <a href=\"https:\/\/t.co\/nMsvt9Wtpp\">pic.twitter.com\/nMsvt9Wtpp<\/a><\/p>&mdash; Reuters (@Reuters) <a href=\"https:\/\/twitter.com\/Reuters\/status\/1998894244736675995?ref_src=twsrc%5Etfw\">December 10, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>Traders had largely priced in the rate cut, but expectations of a more hawkish stance were dashed as the Fed signalled a more accommodative approach going into 2026.<\/p>\n\n\n\n<p>This pivot allowed traders to reprice the path of monetary policy, with Fed funds futures now implying <strong>two additional rate cuts in 2026<\/strong>, compared to the Fed\u2019s median projection of just one.<\/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\">US President Trump criticized the Fed&#39;s 25 basis point rate cut as too small, suggesting it could have &#39;been doubled&#39; <a href=\"https:\/\/t.co\/7TvokiKM7O\">pic.twitter.com\/7TvokiKM7O<\/a><\/p>&mdash; Reuters (@Reuters) <a href=\"https:\/\/twitter.com\/Reuters\/status\/1998892986328035619?ref_src=twsrc%5Etfw\">December 10, 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 impact was immediate across currency markets. The <strong>US Dollar Index (USDX)<\/strong> slumped to an intraday low of <strong>98.18<\/strong>, its weakest level since late October. The <strong>euro<\/strong> pushed past <strong>$1.17<\/strong>, the <strong>yen<\/strong> rebounded to <strong>155.64<\/strong>, and <strong>sterling<\/strong> climbed to a 1.5-month peak at <strong>$1.3391<\/strong>.<\/p>\n\n\n\n<p>Adding to the downward pressure was the Fed\u2019s announcement of a <strong>$40 billion <\/strong>programme to purchase Treasury bills starting December 12, aimed at improving market liquidity.<\/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\">The Fed said it will begin buying $40 billion of Treasury bills per month starting Dec. 12 as it\u2019s looking to rebuild reserves in the financial system which dwindled while it was tightening its balance sheet <a href=\"https:\/\/t.co\/ZUb9dmr9y2\">https:\/\/t.co\/ZUb9dmr9y2<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/1998834189471228003?ref_src=twsrc%5Etfw\">December 10, 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 size and timing of this operation caught traders off guard, further reinforcing the view that the Fed is easing policy more aggressively than expected.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Technical Analysis<\/h2>\n\n\n\n<p>The <strong>US Dollar Index (USDX)<\/strong> has slipped to <strong>98.18<\/strong>, continuing its gradual retreat from the <strong>late November high near 100.85<\/strong>. While the dollar remains within a broader uptrend from the September low at <strong>95.82<\/strong>, recent price action suggests weakening momentum.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/www.vtmarkets.com\/en-ca\/wp-content\/uploads\/sites\/13\/2026\/03\/1_image-17-1024x450.jpg\" alt=\"\" class=\"wp-image-36545\" \/><\/figure>\n\n\n\n<p>Price is now <strong>testing support at the 98.00\u201398.20 area<\/strong>, a critical zone that previously acted as resistance in October and support in early November.<\/p>\n\n\n\n<p>A clean break below this could open the door for a drop toward <strong>97.50<\/strong>, or even a retest of <strong>96.80\u201395.80<\/strong> if bearish pressure intensifies.<\/p>\n\n\n\n<p>The MACD has crossed below the signal line and is falling toward the zero line, indicating <strong>bearish momentum<\/strong> is building. Meanwhile, the short-term moving averages (5, 10, 30) have aligned bearishly and are sloping downward.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Cautious Forecast<\/h2>\n\n\n\n<p>With the Fed\u2019s dovish pivot now confirmed and liquidity measures kicking off next week, the dollar may struggle to regain strength in the near term.<\/p>\n\n\n\n<p>A sustained move below the 98.00 level would reinforce bearish sentiment and deepen downside momentum heading into the final stretch of the year.<\/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>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>USDX falls toward 98.00 as FOMC outlook triggers broader risk-on sentiment. &#8211; vtmarkets.com<\/p>\n","protected":false},"author":64,"featured_media":19471,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[31],"tags":[9,11],"class_list":["post-36541","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-ca\/wp-json\/wp\/v2\/posts\/36541","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/64"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=36541"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36541\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/19471"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=36541"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=36541"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=36541"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}