Dollar continues downward trajectory as markets eye Fed rate cut

The dollar’s value against a basket of major currencies is under pressure, as market participants anticipate the beginning of an easing cycle by the U.S. Federal Reserve. The U.S. dollar index (DXY) chart is displaying a continued downward trajectory, dipping to its year low. After briefly breaking below the support level, the dollar has shown little resilience, as bearish momentum dominates. We believe that the recent dip reflects market expectations of a more dovish Federal Reserve. Fed funds futures indicate a 67% probability of a 50 basis point rate cut, fuelling a bearish outlook for the dollar. On the upside, any retracement is likely to face resistance where the moving averages converge. With bearish technicals and a dovish Fed outlook, the dollar could remain under pressure.

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