The US Dollar experienced a sharp decline on Wednesday as the Federal Reserve’s rate cut was digested. The US Dollar Index fell to multi-week lows in the 98.60-98.50 range, affected by falling yields post-FOMC. Upcoming US data includes Balance of Trade, Initial Jobless Claims, and Wholesale Inventories.
EUR/USD saw a resurgence, overcoming four days of pullbacks, nearing the 1.1700 mark. Germany’s Inflation Rate is set to be released soon. GBP/USD surged, approaching monthly highs close to 1.3400, with anticipated data from the RICS House Price Balance and a speech by BoE’s Kroszner. USD/JPY saw a notable decline toward the 155.80 zone; forthcoming data includes Japan’s BSI Large Manufacturing Index and Foreign Bond Investment figures.
The Commodities Market
The AUD/USD reached heights not seen since mid-September, around 0.6680, with a focus on the upcoming Australian labour market report. Meanwhile, WTI climbed back to $59.00 per barrel amid geopolitical reflections and the Fed’s decision. Gold saw an uptick to three-day highs near $4,240 per troy ounce; silver continued its rise, nearing $62.00 per ounce.
With the Federal Reserve finally cutting rates, the US dollar’s weakness is the main theme we need to trade on. We are seeing a classic “risk-on” reaction, so we should favor selling the dollar against other major currencies. The upcoming weekly Initial Jobless Claims data will be crucial; if the number comes in above the recent average of around 220,000, it will confirm a cooling labor market and likely push the dollar even lower.
Given the dollar’s decline, we are looking at buying EUR/USD call options, especially as it approaches the 1.1700 level. The European Central Bank has been more hesitant to cut rates, which provides a strong tailwind for the euro. Tomorrow’s German inflation data will be a key catalyst; a figure holding firm around the 2.5% mark would strengthen our position.
The Australian dollar presents a clear short-term opportunity ahead of its own jobs report. We can see AUD/USD pushing past 0.6700 if the employment data shows continued strength, a trend we’ve seen for much of 2025. Considering Australia’s unemployment rate has held below 4.0% this year, a positive surprise seems more likely than a negative one.
Opportunities in Commodities
In commodities, the surge in gold to $4,240 is a direct consequence of falling US interest rates and a weaker dollar. This is a historical pattern we can trust, so adding to long gold positions or buying derivatives tied to it makes sense. Silver hitting record highs above $60.00 signals intense speculative interest that could carry it further in the coming weeks.
We also see strength in oil, with WTI back above $59, as the weaker dollar makes it cheaper for international buyers. This is supported by persistent geopolitical tensions and supply discipline from OPEC+, which we have seen extend its production cuts through the end of 2025. This fundamental backdrop suggests we should be prepared for prices to test higher levels.
