USD Weakens Across Board as Markets Price Aggressive Fed Easing
The US dollar index dropped 0.6% to 91.20 as traders increasingly bet on more aggressive Federal Reserve easing, with futures markets now pricing in 75 basis points of rate cuts by year-end. EUR/USD climbed 0.7% to 1.1715, while GBP/USD advanced 0.5% to 1.3920, both benefiting from broad dollar weakness. USD/JPY fell sharply by 0.8% to 108.50 as risk-off sentiment drove flows into the safe-haven yen, while USD/CHF declined 0.4% to 0.9080. The shift in market expectations follows softer US economic data and dovish Fed commentary suggesting patience on policy normalization. Technical analysis shows the dollar index breaking below key support at 91.50, opening the path toward 90.80. Stock markets rallied on the prospect of continued monetary accommodation, with the S&P 500 gaining 1.2%. Traders should monitor upcoming Fed speeches for any pushback against current market pricing.
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