Euro Slips, Dollar Rebounds
EUR/USD weakened for a second day on Thursday, falling below 1.1800 after briefly breaking above 1.1900 on Wednesday. The US dollar regained strength ahead of the US session's close, reversing the initial negative reaction to the Fed's decision.
In line with expectations, the Fed cut interest rates by 25 basis points and signaled further cuts to support a weakening labor market. Rate projections suggest two more cuts in 2025 and one in 2026, although policymakers remain divided on the path.
Jerome Powell's tone was less dovish. He called this move a "risk management reduction" and warned that inflationary pressures could persist into 2026, while emphasizing the need for a swift rate cut. These remarks provided additional support for the US dollar and pressured the euro.
Today's data agenda includes US initial claims and the Philly Fed manufacturing survey, which could provide further fundamental direction. Barring any major surprises, moderate risk appetite could potentially limit the dollar's rally in the coming sessions.
Key points:
EUR/USD falls below 1.1800; Dollar recovers post-Fed.
The Fed cuts 25 bps; projections: 2 (2025) + 1 (2026).
Powell: "risk management reduction," wary of inflation → Dollar strengthens.
Data focus: Jobless Claims & Philly Fed; moderate risk-on sentiment could restrain the dollar rally. (ads)
Source: Bloomberg.com
