Fed Rate Cut Sparks Global FX Volatility - USD Shows Mixed Performance

The Federal Reserve's first interest rate reduction in nine months triggered significant movements across major currency pairs, with market participants reassessing positions based on updated 2025 monetary policy projections. The decision, which markets had largely priced in, was accompanied by forward guidance suggesting additional easing measures throughout next year. USD initially weakened against risk-sensitive currencies but later stabilized as traders digested the implications for interest rate differentials. EUR/USD tested 1.1100 resistance before pulling back, while GBP/USD maintained gains above 1.3200. The Japanese yen strengthened modestly as yield differentials narrowed. Emerging market currencies saw mixed reactions, with higher-yielding pairs attracting renewed interest. Technical indicators suggest consolidation phase ahead as markets await further economic data to confirm the Fed's dovish trajectory.