USD weakens across majors as December Fed rate cut expectations surge

The US dollar declined broadly against major currencies as market participants increasingly price in a Federal Reserve rate cut for December. USD/JPY fell 0.4% to 151.20, while GBP/USD climbed 0.35% to 1.2680, reflecting the greenback's weakness amid shifting monetary policy expectations. The dovish sentiment stems from recent economic data suggesting cooling inflation and moderating growth, prompting traders to bet on a 75% probability of a 25 basis point cut at the December FOMC meeting. EUR/USD benefited from the dollar weakness, advancing toward 1.0600 resistance. Market sentiment remains firmly risk-on, supporting high-beta currencies against the safe-haven dollar. Technical analysis shows USD index testing crucial support at 105.50, with a break below potentially accelerating dollar selling. Traders should monitor upcoming US economic releases, particularly inflation data, which could either reinforce or challenge current rate cut expectations.