The US dollar lingered near multi-year lows on Thursday after the Federal Reserve delivered a widely expected quarter-point rate cut.
Fed projections pointed to two additional cuts this year, which could continue to weigh on the currency.
The Fed’s Summary of Economic Projections reinforced the risks for the dollar, with officials now anticipating the policy rate at 3.50–3.75% by year-end, compared to 3.75–4.0% projected in June.
Still, Powell resisted validating bets for deeper cuts, noting that the path ahead depends heavily on incoming data. Additionally, his cautious tone could limit the immediate pressure on the dollar. However, the currency could remain exposed to the upcoming economic data releases.
Treasury yields were volatile but remained near the levels seen during the last few days as the 10-year stayed above the 4.0% mark. Markets will now turn to today’s jobless claims release, expected at 240K. Softer labour data could revive speculation of a faster pace of cuts and drag yields and the dollar lower, while resilience may ease pressure on the dollar in the short term.
