USD Weakens as Fed Rate Cut Expectations Intensify Across Markets

The US Dollar Index has declined 0.5% to 105.20 as global markets increasingly price in Federal Reserve rate cuts for early 2025. Growing expectations of monetary easing have emerged following recent economic data suggesting cooling inflation and moderating labor market conditions. Market participants now assign a 75% probability to a 25-basis-point cut at the March FOMC meeting, up from 60% last week. The dollar's broad-based weakness has benefited major counterparts, with EUR/USD gaining 60 pips to 1.0580 and GBP/USD advancing to 1.2720. Technical indicators show the DXY approaching critical support at 105.00, which if broken could accelerate selling pressure. Treasury yields have also retreated, with the 10-year falling to 4.15%, further undermining dollar strength. Traders should monitor upcoming US economic releases, particularly Friday's NFP data, which could either validate or challenge current rate cut expectations.