{"id":15060,"date":"2024-09-19T07:28:29","date_gmt":"2024-09-19T07:28:29","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=15060"},"modified":"2024-09-19T07:28:29","modified_gmt":"2024-09-19T07:28:29","slug":"dollar-recovers-following-the-feds-sharp-rate-cut","status":"publish","type":"post","link":"https:\/\/www.global-vtrader.com\/en\/analysis\/dollar-recovers-following-the-feds-sharp-rate-cut\/","title":{"rendered":"Dollar recovers following the Fed&#8217;s sharp rate cut"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><strong>Key points:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Dollar recovers, rising to 101.03 DXY after initial post-cut drop.<\/li>\n\n\n\n<li>Federal Reserve\u2019s half-point interest rate cut sets the tone for future easing cycles.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-dots\" \/>\n\n\n\n<p class=\"wp-block-paragraph\">The U.S. dollar rallied across the board on Thursday, <a href=\"https:\/\/www.vtmarkets.com\/analysis\/dollar-stabilises-as-aggressive-rate-cut-expectations-ease\/\">reversing earlier declines after the Federal Reserve<\/a> delivered an aggressive half-percentage-point interest rate cut. This marked the start of a monetary easing cycle aimed at maintaining low unemployment as inflation softens. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Chair Jerome Powell\u2019s statement reiterated the central bank\u2019s commitment to its dual mandate of employment and inflation.<\/p>\n\n\n\n<h1 class=\"wp-block-heading has-medium-font-size\"><strong>Traders react to Fed cut with &#8216;buy the rumour, sell the fact&#8217;<\/strong><\/h1>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/x.com\/business\/status\/1836555836400767120\">Markets had largely anticipated this cut<\/a>, with many already factoring in a 50 basis-point reduction based on prior media leaks. However, it surprised some economists, who were expecting a smaller, 25 basis-point move. <\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">The Federal Reserve lowered its benchmark interest rate by a half percentage point, in an aggressive start to a policy shift aimed at bolstering the US labor market <a href=\"https:\/\/t.co\/b6sporafzd\">https:\/\/t.co\/b6sporafzd<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/1836555836400767120?ref_src=twsrc%5Etfw\">September 19, 2024<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Despite these mixed expectations, traders responded to the actual decision with a \u2018buy the rumour, sell the fact\u2019 pattern, causing the dollar to claw back losses made earlier in the week.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><strong>Dollar recovers in early Asian trading, gains against yen while euro dips slightl<\/strong>y<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">By early Asian trading hours, the U.S. dollar index rose to 101.03, recovering from a one-year low in the previous session. The dollar also strengthened against the Japanese yen, gaining 0.58% to hit 143.12, while the euro slipped slightly, trading 0.04% lower at $1.1113 after hitting a three-week high the day before.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img decoding=\"async\" src=\"https:\/\/www.vtmarkets.com\/wp-content\/uploads\/2024\/09\/20240919-152412-1024x470.jpg\" alt=\"\" class=\"wp-image-15061\" style=\"width:1450px;height:auto\" \/><\/figure>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\"><em>Picture: Dollar index trading at 100.910 as seen on the <a href=\"https:\/\/vtmarketsapp.onelink.me\/CD7D\/240525WA\">VT Markets app<\/a>.<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The U.S. dollar index (DXY) surged today, closing at 100.865, after hitting an intraday high of 101.155. The price action indicates that traders are reacting to expectations of further rate cuts from the Federal Reserve. Fed policymakers have hinted at another half-percentage-point reduction by the end of this year, with additional cuts anticipated through 2026.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Technically, we can observe a breakout from the 100.600 resistance level, a key pivot for the index in the short term. The 5, 10, and 30-period moving averages are all trending upwards, indicating bullish momentum. Additionally, the MACD has turned sharply positive, suggesting the possibility of further gains in the coming sessions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Support remains firm at 100.200, near the previous day&#8217;s low, while the immediate resistance level lies just above 101.200. Although longer-term forecasts remain uncertain, the expectation of a soft landing for the U.S. economy has bolstered market sentiment, suggesting further dollar weakness in the future.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>You might be interested: <a href=\"https:\/\/www.vtmarkets.com\/blog\/research\/fomc-heres-why-wed-love-to-see-the-fed-cut-by-50-basis-points-in-september\/\">FOMC: Here\u2019s why we\u2019d love to see the Fed cut by 50 basis points in September<\/a><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The outlook for the dollar remains cautious. The Fed\u2019s commitment to easing, coupled with improving global economic conditions, suggests potential for further declines next year. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Market participants will continue to assess data, focusing on how soft economic landings may weigh on the greenback.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Start trading now \u2014 click <\/strong><a href=\"https:\/\/www.vtmarkets.com\/trade-now\/?utm_campaign=account_c&amp;utm_source=dma&amp;utm_medium=website\"><strong>here<\/strong><\/a><strong> to create your live VT Markets account.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The U.S. dollar rallied across the board on Thursday, reversing earlier declines after the Federal Reserve delivered an aggressive half-percentage-point interest rate cut. This marked the start of a monetary easing cycle aimed at maintaining low unemployment as inflation softens. -vtmarkets.com<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[27],"tags":[12,31],"class_list":["post-15060","post","type-post","status-publish","format-standard","hentry","category-analysis","tag-forex","tag-indices"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts\/15060","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/comments?post=15060"}],"version-history":[{"count":0,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts\/15060\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/media?parent=15060"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/categories?post=15060"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/tags?post=15060"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}