Fed Discord Strengthens USD Across Major Pairs Despite Rate Cut Cycle

The US Dollar has gained against all major currencies as Federal Reserve officials express divergent views on the pace of future rate cuts. EUR/USD dropped 0.6% to 1.0825, while GBP/USD fell 0.8% to 1.3210. USD/JPY rose 0.7% to 153.40, and USD/CHF advanced 0.5% to 0.8680. The discord stems from differing assessments of inflation persistence, with some Fed members advocating patience while others support continued easing. Markets have scaled back expectations for 2025 rate cuts from four to three 25-basis-point reductions. The Dollar Index climbed to 106.15, approaching October highs. Technical analysis shows EUR/USD breaking below the 1.0850 support, targeting 1.0800. The divergence in Fed communication has increased volatility, with implied volatility measures rising across major pairs. Traders should prepare for continued dollar strength until clearer Fed consensus emerges.