Dollar Weakens Ahead of FOMC
The US dollar fell to a more than two-month low against the pound and euro, and hit a 10-month low versus the Australian dollar on Tuesday, September 16, 2025. Markets are increasingly confident that the Fed will cut interest rates by 25 basis points on Wednesday, while US President Donald Trump is again pushing for a larger cut.
Market focus is on the Fed meeting—the tone of Jerome Powell's speech will be crucial. Analysts believe that if Powell emphasizes inflation risks or uncertainty about the economic outlook, market participants could further trim expectations for further cuts.
In the UK, GBP strengthened 0.2% to $1.3627 after labor data showed gradual weakness: the number of salaried workers fell for the seventh consecutive month and core private sector wage growth slowed to 4.7% (from 4.8%). The Bank of England is expected to leave interest rates on hold this week, after cutting in August.
The euro briefly rose 0.3% to $1.1797, while the DXY slipped to 97.121. The AUD marked its highest level since November 8 at $0.6677 before slightly correcting to $0.6666. USD/JPY weakened 0.3% to 146.920 ahead of the Bank of Japan's decision on Friday (markets expect interest rates to remain at 0.5%). In Europe, the German ZEW report, as well as eurozone wage and industrial production data, are awaited today.
Key points:
Markets anticipate a 25-bps Fed cut; Trump pushes for a larger cut.
Powell's tone will be key to the dollar's post-decision direction.
GBP strengthened to $1.3627 after soft UK labor market data; the Bank of England is expected to hold interest rates.
Euro strengthens, AUD hits 10-month peak; USD/JPY weakens ahead of the Bank of Japan. (ayu)
Source: Newsmaker.id
