USD Index drops as Fed rate cut expectations intensify

The US Dollar Index has fallen 0.5% to 104.20 as markets price in increased probability of Federal Reserve rate cuts in early 2025. EUR/USD advanced 0.4% to 1.0895, breaking above the 50-day moving average at 1.0880, while USD/JPY declined to 149.85 amid broad dollar weakness. Market pricing now indicates a 75% chance of a 25 basis point cut at the March FOMC meeting, up from 60% last week. Recent US economic data showing softening inflation pressures and moderating labor market conditions have reinforced dovish expectations. The dollar's technical picture has deteriorated, with the DXY breaking below key support at 104.50. Immediate support lies at 104.00, while resistance has formed at 104.75. Currency strategists note that sustained breaks below 104.00 could accelerate dollar selling, potentially pushing EUR/USD toward 1.1000 and USD/JPY to test 149.00.