Forex News
The US Dollar (USD) sold off sharply on Wednesday, as investors continued to digest the largely anticipated rate cut by the Federal Reserve, while the updated “dots plot” surprised no one.
Here’s what to watch on Thursday, December 11:
The US Dollar Index (DXY) reversed two daily gains in a row and collapsed to multi-week lows in the 98.60-98.50 band amid declining yields following the FOMC event on Wednesday. The Balance of Trade results are due, seconded by the usual weekly Initial Jobless Claims and Wholesale Inventories.
EUR/USD regained strong traction and left behind four consecutive daily pullbacks, revisiting once again the vicinity of the 1.1700 hurdle. Next on tap on the domestic calendar will be Germany’s final Inflation Rate on December 12.
GBP/USD rose sharply and challenged monthly peaks in the area just shy of the 1.3400 barrier. The RICS House Price Balance is due, seconded by the speech by the BoE’s Kroszner.
USD/JPY dropped markedly toward the 155.80 zone following the post-FOMC marked pullback in the Greenback. The BSI Large Manufacturing index comes next, seconded by the weekly Foreign Bond Investment figures.
AUD/USD advanced to levels last seen in mid-September around 0.6680 in response to the marked decline in the buck. The release of the labour market report will take centre stage in Oz.
WTI prices reversed the initial decline and managed to regain the $59.00 mark per barrel, as traders continued to assess the geopolitical scenario and the Fed’s interest rate decision.
Gold prices rose to three-day highs near $4,240 per troy ounce in the wake of the FOMC gathering and amid the pronounced pullback in the Greenback and US Treasury yields. Silver prices, in the meantime, extended their rally to record highs near the $62.00 mark per ounce.
At the usual post-meeting press conference, Fed Chair Jerome Powell explained why policymakers decided to lower the Federal Funds Target Range (FFTR) to 3.50%–3.75% after the December meeting and took questions from reporters about the move.
Powell's press conference highlights
The end of the government shutdown informs projections of a swing to higher growth next year.
Implication of Fed forecasts is higher productivity.
Our two goals are a bit in tension.
Everyone at the table agrees inflation is too high.
Fairly broad support for today's decision.
The effects of rate cuts so far are only beginning to come in.
“Extent and timing” phrase points out we’ll carefully evaluate incoming data.
Well positioned to wait to see how the economy evolves.
Consumers continue to spend.
Some people feel we should stop here and wait.
I don't think a rate hike is anyone's base case. I am not hearing that.
The division is between holding rates steady from here vs. cutting.
Some people feel we should cut once or more; don't think a rate hike is anyone's base case next move.
Don't expect a sharper downturn in employment with rates in a plausible range of neutral.
We have made progress this year in non-tariff-related inflation.
In October, said that there was no certainty of a December rate cut, and that was indeed correct.
Why we moved today is due to the gradual cooling in the labour market.
We think there's a negative 20,000 in payrolls per month.
We think job gains have been overstated by 60k in recent months.
Evidence is growing that services inflation has come down, and goods inflation is entirely due to tariffs.
It doesn't feel like a hot economy.
This is a unique situation with tension between our 2 goals.
We're now in the high end of the range for neutral.
If there are no new tariff announcements, inflation from goods should peak in Q1.
Nothing is happening in long rates that suggests concern about inflation in the long run.
Labour market has significant downside risks.
People care a lot about the labour market.
If you get away from tariffs, inflation is in the low 2s.
Tariffs are likely to be one-time price increases.
If we didn’t have to worry about the labour market, the policy rate would be higher.
This section below was published at 19:00 GMT to cover the Federal Reserve's policy decisions and the immediate market reaction.
At its December meeting, the Federal Reserve (Fed) lowered its interest rates by 25 basis points, bringing the Federal Funds Target Range (FFTR) down to 3.50%–3.75%, right in line with what markets were expecting.
Highlights from the FOMC statement
Fed signals rate-cut pause by adding 'extent and timing' to describe its approach to additional adjustments to the policy rate.
Economy has been expanding at a moderate pace, job gains have slowed and the unemployment rate has edged up.
Inflation has moved up from earlier in the year and remains somewhat elevated.
Uncertainty about the outlook remains elevated.
Attentive to risks on both sides of the dual mandate, judges that downside risks to employment have risen.
Will begin reserve-management purchases of treasury bills beginning on december 12.
First reserve-management purchase operation round to buy about $40 billion in treasury bills.
Initial treasury-bill buying to be elevated 'for a few months'.
Pace of future reserve-management purchases likely 'significantly reduced'.
Ends operational limit on standing overnight repo operations.
Vote in favour of the policy decision was 9–3, with Miran preferring a half-percentage-point cut and Goolsbee and Schmid preferring no cut.
Key takeaways from the Summary of Economic Projections (SEP)
Fed officials' median view of the fed funds rate at end-2025 is 3.6% (prev 3.6%).
Fed officials' median view of the fed funds rate at end-2026 is 3.4% (prev 3.4%).
Fed officials' median view of the fed funds rate at end-2027 is 3.1% (prev 3.1%).
Fed officials' median view of the fed funds rate at end-2028 is 3.1% (prev 3.1%).
Fed officials' median view of the fed funds rate in the longer run is 3.0% (prev 3.0%).
Fed projections imply 25 bps of rate cuts in 2026, and another 25 basis points of rate cuts in 2027.
Fed projections show wide divergence of views for the appropriate path of rates in 2026 and beyond.
Fed policymakers see a 4.4% unemployment rate at end-2026 versus 4.4% in September projections.
Fed policymakers see end-2026 PCE inflation at 2.4% versus 2.6% in September; core seen at 2.5% versus 2.6%.
Fed policymakers see 2.3% GDP growth in 2026 versus 1.8% in September, and see longer-run growth at 1.8% versus 1.8% in September.
Market reaction to Fed policy announcements
The US Dollar remains on the back foot, setting aside part of the recent uptick and sending the US Dollar Index (DXY) back to the sub-99.00 region amid declining US Treasury yields across the spectrum.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.38% | -0.40% | -0.44% | -0.23% | -0.27% | -0.28% | -0.56% | |
| EUR | 0.38% | -0.02% | -0.05% | 0.15% | 0.10% | 0.09% | -0.18% | |
| GBP | 0.40% | 0.02% | -0.02% | 0.17% | 0.12% | 0.11% | -0.16% | |
| JPY | 0.44% | 0.05% | 0.02% | 0.19% | 0.15% | 0.15% | -0.14% | |
| CAD | 0.23% | -0.15% | -0.17% | -0.19% | -0.04% | -0.07% | -0.33% | |
| AUD | 0.27% | -0.10% | -0.12% | -0.15% | 0.04% | -0.01% | -0.30% | |
| NZD | 0.28% | -0.09% | -0.11% | -0.15% | 0.07% | 0.00% | -0.28% | |
| CHF | 0.56% | 0.18% | 0.16% | 0.14% | 0.33% | 0.30% | 0.28% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
This section below was published at 10:00 GMT as a preview of the Federal Reserve's policy announcements.
- The US Federal Reserve is expected to cut the policy rate at the last meeting of 2025.
- The revised Summary of Economic Projections and Fed Chair Powell’s comments will be key as a rate cut is largely priced in.
- The US Dollar could stay on the back foot unless the Fed delivers a hawkish surprise.
The United States (US) Federal Reserve (Fed) will announce its interest rate decision on Wednesday, with markets widely expecting the US central bank to deliver a final 25 bps cut for 2025. While the move is widely priced in, this may be overshadowed by the vote itself as dissent within the Committee is anticipated from both hawks and doves.
Along with its interest rate decision, the Fed will also publish the Monetary Policy Statement, alongside the revised Summary of Economic Projections (SEP), following the December policy meeting on Wednesday.
The CME FedWatch Tool shows that investors are pricing in about a 90% probability of a 25 bps reduction in December to the 3.5%-3.75% range, but see a high likelihood of a policy hold in January. The last SEP, published in September, showed that policymakers’ projections implied a 25 bps reduction in 2026.
According to a recently-conducted Reuters poll, 89 of 108 economists have predicted that the Fed will opt for a 25 bps cut in December. Additionally, half of the polled economists saw the US central bank cutting the policy rate by another 25 bps to the range of 3.25%-3.5% in the first quarter of 2026.
While economists expect modest revisions in the growth and inflation projections, the market’s attention will be on Fed Chair Jerome Powell’s words and tone, which will try to reflect the divergent opinions of a deeply divided committee.
In the post-meeting press conference, Powell will also likely be asked about his potential successor next year, US President Donald Trump’s chief economic adviser Kevin Hassett. Markets expect Hassett to steer the policy towards a looser path if chosen as the new chair.
TD Securities analysts see the Fed adopting a hawkish tone after cutting the policy rate.
“We expect the FOMC to cut another 25bp. The decision to remain on an easing path will be equally or more contentious than October's, and we look for the final rate cut of the year to result in decidedly more hawkish guidance. We expect the Board at large to fully support the decision to ease in December, while hawkish regional Fed presidents are likely to show dissent,” they explain.
When will the Fed announce its interest rate decision and how could it affect EUR/USD?
The Fed is scheduled to announce its interest rate decision and publish the revised SEP at 19:00 GMT. This will be followed by Fed Chair Jerome Powell's press conference starting at 19:30 GMT.
The rate decision itself is unlikely to trigger a significant market reaction, but the voting pattern could be important as it could highlight a division of opinion among policymakers. In case the rate cut is decided with a slim majority, the USD could stay resilient against its peers, causing EUR/USD to stretch lower.
Investors will also scrutinize the details of the SEP. In case new projections point to at least two or more rate cuts next year, this could be assessed as a sign of a looser policy moving forward and hurt the USD. Conversely, the USD could gather strength and drag EUR/USD lower if the SEP shows a single cut in 2026, which is what the September SEP showed.
In the post-meeting press conference, Chair Powell’s remarks on inflation dynamics, the labor market and the policy outlook will be watched closely. Although Powell is unlikely to comment on his potential replacement, he could warn against prematurely cutting rates and help the USD hold its ground. Furthermore, Powell’s tone could be seen as hawkish if he adopts an optimistic tone about the labor market, while emphasizing the possibility of inflation rising again or not falling as anticipated.
On the flip side, the USD could come under renewed selling pressure and open the door for a leg higher in EUR/USD in case Powell voices his concerns about worsening conditions in the labor market, citing the concerning trend seen in private sector payrolls. Earlier this month, the Automatic Data Processing (ADP) reported that private employers shed 32,000 jobs in November.
Commenting on the potential impact of the Fed event on the USD’s valuation, “we expect the December Fed meeting to bring a hawkish Fed cut which could see the recent USD selloff take a momentary breather,” say TD Securities analysts. “Beyond that, we continue to see a moderation in the USD sentiment and continued weakness. Our quant macro framework's trading weight in the Dollar is also moderating from a combination of market and macro factors,” they added.
Eren Sengezer, European Session Lead Analyst at FXStreet, provides a short-term technical outlook for EUR/USD:
“EUR/USD clings to a bullish stance in the short-term outlook, as it manages to hold above the 20-day, 50-day and 200-day Simple Moving Averages (SMAs). Additionally, the Relative Strength Index (RSI) indicator stays near 60 on the same chart.”
“The 100-day SMA aligns as a pivot point near 1.1650. Once that level is confirmed as support, bulls could show interest. In this scenario, 1.1730 (static level) could act as an interim resistance level ahead of 1.1918 (September 17 high). On the downside, the Fibonacci 23.6% retracement level of the January-September uptrend and the 200-day SMA form a key support level area at 1.1480-1.1460 ahead of 1.1240 (Fibonacci 38.2% retracement).”
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
- The US Dollar Index caught a volatile leg lower on Wednesday after the Fed delivered a third straight rate cut.
- The FOMC has seen a sharp widening of policymaker expectations, but the rate outlook remains largely unchanged.
The US Dollar Index (DXY) tumbled to fresh intraday lows on Wednesday after the Federal Reserve (Fed) delivered a widely anticipated third straight interest rate cut, lowering its main policy rate to its lowest level in three years. Volatility widened sharply following the latest Fed rate decision as Greenback markets struggled to digest the Fed's latest trajectory.
Federal Reserve Chair Jerome Powell held a cautious press conference following the Fed's latest interest rate decision. He indicated that a third consecutive interest rate cut puts the Fed in a "comfortable" position to adopt a wait-and-see approach regarding additional data before making any definitive decisions on future rate changes.
While the Fed's dot plot of interest rate expectations has broadened, the forecasts from the Federal Open Market Committee (FOMC) remain largely unchanged from the previous update. The median expectation among policymakers is for a single rate cut in 2026, followed by another reduction in 2027, before rates stabilize around their long-term level of approximately 3.0%.
The Federal Open Market Committee (FOMC) voted nine-to-three in favor of another quarter-point interest rate cut. One policymaker preferred a larger cut of 50 basis points, while two members opted for no cuts at all.
DXY 5-minute chart
Economic Indicator
Fed Interest Rate Decision
The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).
Read more.Last release: Wed Dec 10, 2025 19:00
Frequency: Irregular
Actual: 3.75%
Consensus: 3.75%
Previous: 4%
Source: Federal Reserve
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
- EUR/USD lurched into intraday highs near 1.1670 after the Fed delivered a widely anticipated interest rate cut.
- Price action quickly reversed course after Fed Chair Powell's cautious appearance.
EUR/USD caught a volatile bullish swing on Wednesday after the Federal Reserve (Fed) delivered a third straight interest rate cut. The Fiber pair tested its highest intraday bids in nearly a week before slumping back into the day's midrange after a cooler-than-expected appearance from Fed Chair Jerome Powell.
Fed Chair Powell delivered a cautious press conference following the Fed's rate call, noting that a third straight interest rate cut leaves the Fed in a "comfortable" position to play wait-and-see for further data before making any firmer decisions on rate moves moving forward. Despite a widening in the Fed's dot plot of interest rate expectations, FOMC rate forecasts remain largely unchanged from the previous iteration, with the median policymaker expecting only a single rate cut in 2026 and a follow-up trim in 2027 before rates normalize near their long-term level around 3.0%.
The Federal Open Market Committee (FOMC) voted nine-to-three to deliver another quarter-point interest rate cut, with one policymaker preferring a 50 basis-point trim and two voters opting for no cuts at all. It is the first time since 2019 that at least three FOMC policymakers voiced outright opposition to an interest rate cut consensus since 2019.
Read more about Fed Chair Powell's press conference
EUR/USD 5-minute chart
Economic Indicator
Fed Interest Rate Decision
The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).
Read more.Last release: Wed Dec 10, 2025 19:00
Frequency: Irregular
Actual: 3.75%
Consensus: 3.75%
Previous: 4%
Source: Federal Reserve
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
The Federal Open Market Committee’s (FOMC) latest dot plot, released on Wednesday, indicates that interest rates will average 3.4% by the end of 2026, in line with the September projection.
If this forecast comes true, the Federal Reserve (Fed) could implement one 25- basis- point (bps) rate cut eachs in 2026 and 2027, after trimming the interest rate by 25 bps on Wednesday for the third consecutive meeting.
In 2027 and 2028, rates are projected to drop to 3.1%, matching September projections. The longer-term forecast remains at 3%.
The Fed also revised its economic projections. The US Gross Domestic Product (GDP) is now projected at 1.7% this year, up from the previous forecast of 1.6%. For 2026, the economy is expected to grow by 2.3%, above the 1.8% estimated in September.
The unemployment rate is expected to remain at 4.5% by the end of 2025, matching the previously estimated figure. For 2026, unemployment is likely to fall to 4.4%, in line with previous expectations.
Finally, the Personal Consumption Expenditures (PCE) Price Index is estimated to fall at 2.9% by the end of the year, below the 3.0% projected in September. In 2026, PCE inflation is expected to ease to 2.4%, slightly lower than the 2.6% projected previously. By 2027, the PCE index is expected to reach 2.1%.
Dot Plot FAQs
The “Dot Plot” is the popular name of the interest-rate projections by the Federal Open Market Committee (FOMC) of the US Federal Reserve (Fed), which implements monetary policy. These are published in the Summary of Economic Projections, a report in which FOMC members also release their individual projections on economic growth, the unemployment rate and inflation for the current year and the next few ones. The document consists of a chart plotting interest-rate projections, with each FOMC member’s forecast represented by a dot. The Fed also adds a table summarizing the range of forecasts and the median for each indicator. This makes it easier for market participants to see how policymakers expect the US economy to perform in the near, medium and long term.
The US Federal Reserve publishes the “Dot Plot” once every other meeting, or in four of the eight yearly scheduled meetings. The Summary of Economic Projections report is published along with the monetary policy decision.
The “Dot Plot” gives a comprehensive insight into the expectations from Federal Reserve (Fed) policymakers. As projections reflect each official’s projection for interest rates at the end of each year, it is considered a key forward-looking indicator. By looking at the “Dot Plot” and comparing the data to current interest-rate levels, market participants can see where policymakers expect rates to head to and the overall direction of monetary policy. As projections are released quarterly, the “Dot Plot” is widely used as a guide to figure out the terminal rate and the possible timing of a policy pivot.
The most market-moving data in the “Dot Plot” is the projection of the federal funds rate. Any change compared with previous projections is likely to influence the US Dollar (USD) valuation. Generally, if the “Dot Plot” shows that policymakers expect higher interest rates in the near term, this tends to be bullish for USD. Likewise, if projections point to lower rates ahead, the USD is likely to weaken.
- GBP/USD climbs above 1.3360, up 0.46%, after the Fed’s decision and vote split.
- Federal Reserve lowers rates to 3.50%–3.75%, aligning with market expectations.
- Dot plot signals only one 25-bp rate cut likely in 2026, keeping traders cautious.
GBP/USD climbs on Wednesday after the Federal Reserve (Fed) decided to cut rates, as expected, on a 9-3 vote split, which witnessed two members voting for holding rates, while Fed Governor Stephen Miran voted for a 50-basis-point cut. At the time of writing, the pair trades at 1.3350, up 0.46%
Federal Reserve’s 9-3 vote split sparks GBP/USD rally, with traders watching key levels
The FOMC vote split was 9–3: Governor Stephen Miran dissented in favor of a 50-bps cut, whereas Jeffrey Schmid and Austan Goolsbee preferred to keep rates unchanged.
The Summary of Economic Projections (SEP), including the updated dot plot, showed that most officials project the fed funds rate to stand near 3.4% next year, implying just one 25-bp reduction in 2026, according to the median.
The dot plot showed that 12 of the 19 members of the Federal Reserve expect the Fed funds rate to be below 3.50% next year. Eight of those twelve sit around the 3%-3.50% range, two expect rates around 2.75%-3%, one at 2.50%-2.75%, and Miran at around 2%-2.25%.
GBP/USD reaction – Hourly chart
GBP/USD pushed to the upside, bouncing off 1.3326 and hit 1.3360, before retreating somewhat ahead of Fed chair Jerome Powell's press conference. A breach of the daily high will expose the December 4 high of 1.3385 ahead of 1.3400. On the downside, if the pair slides below 1.3320, expect a test of the day's low of 1.3295, with eyes set on 1.3250.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- Gold initially dropped but rebounded as traders viewed the Fed’s stance as dovish.
- Federal Reserve lowers rates to 3.50%–3.75%, hinting at only one more cut next year.
- Policymakers project neutral rates at 3% beyond 2028, signaling long-term caution.
Gold (XAU/USD) prices rise on Wednesday after the Federal Reserve (Fed) decided to cut rates, as expected. At the time of writing, XAU/USD trades volatile, between $4,190-$4,220, posting losses of over 0.25%.
Federal Reserve’s rate cut sparks volatility, sending gold prices to daily highs
On Wednesday, the Fed cut rates to 3.50%-3.75% as expected and kept the door open for just one rate cut in 2026. The Federal Open Market Committee (FOMC) vote split was 9-3, with Governor Miran voting for a 50 bps cut, while Jeffrey Schmid and Austan Goolsbee voted to hold rates unchanged.
The Summary of Economic Projections (SEP) showed that most members hinted that the fed funds rates for the next year would be around 3.4%, implying that policymakers could cut 25 bps next year. For the longer term beyond 2028, Fed policymakers see neutral rates at around 3%.
Highlights of the monetary policy statement
In the statement, the Fed mentioned, “Job gains have slowed this year, and the unemployment rate has edged up through September. More recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.”
They added that, “The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.”
Gold price reaction - Hourly chart
Initially, XAU/USD headed south, but as the decision was perceived as dovish, Gold began to rally, printing a daily high of $4,219.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
White House Economic Adviser Kevin Hassett stated that the Federal Reserve (Fed) has plenty of room to cut rates this month and will likely need to do so again. The front-runner to be the Federal Reserve's next Chair spoke on Fox News on Wednesday, saying he is "honored" to be on the list of candidates to succeed Jerome Powell.
Key takeaways
Fed has plenty of room to cut rates.
Probably will need to do some more.
Stronger data could support 50 basis point cut.
President will make Fed chair choice in a week or two.
I'm honored to be on the list of candidates.”
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.27% | -0.29% | -0.30% | -0.13% | -0.03% | -0.06% | -0.42% | |
| EUR | 0.27% | -0.02% | -0.04% | 0.15% | 0.24% | 0.22% | -0.15% | |
| GBP | 0.29% | 0.02% | 0.00% | 0.17% | 0.26% | 0.24% | -0.13% | |
| JPY | 0.30% | 0.04% | 0.00% | 0.19% | 0.28% | 0.28% | -0.11% | |
| CAD | 0.13% | -0.15% | -0.17% | -0.19% | 0.09% | 0.08% | -0.30% | |
| AUD | 0.03% | -0.24% | -0.26% | -0.28% | -0.09% | -0.02% | -0.39% | |
| NZD | 0.06% | -0.22% | -0.24% | -0.28% | -0.08% | 0.02% | -0.37% | |
| CHF | 0.42% | 0.15% | 0.13% | 0.11% | 0.30% | 0.39% | 0.37% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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