Forex News: U.S. Dollar Slides As Investors Parse Fed Rate

U.S. Dollar Slides As Investors Parse Fed Rate Decision Amid Economic Data Releases

(RTTNews) - The U.S. Dollar value inched lower on Thursday as market participants continued to analyze yesterday's U.S. Federal Reserve's interest rate decision along with today's economic data releases amid U.S. outreach to Iran for discussing a framework for negotiations.

Today, the U.S. Dollar Index DXY, which measures the Greenback against a basket of other major currencies, was last seen trading at 101.85, down by 0.34 (or 0.33%).

While against the Euro, the USD was trading at 1.118, down by 0.26%, against the GBP, the USD was trading at 1.337, down by 0.40%.

Against the USD, the Japanese Yen was trading at 157.686, up by 0.08%, the Swiss Franc was trading at 0.824, up by 0.46%; and the Canadian Dollar was trading at 1.399, up by 0.04%.

Against one unit of Australian Dollar, the USD was trading at 0.703, up by 0.35%.

In line with predictions by economists and analysts, yesterday, the Federal Open Market Committee kept the target range for the federal funds rate unchanged and held it in the 3.75% to 4.00% range.

The decision was taken by a vote of 10-2.

Fed Governor Lisa Cook and Cleveland Fed President Beth Hammock voted against holding the rates steady. Instead, they sought an increase of 25 basis points.

The central bank intends to wait until the November mid-term elections to decide on the need for further rate hikes.

Market participants interpreted the move by the Fed as dovish after U.S. Fed Chair Kevin Warsh stated that financial conditions have tightened, hinting that there may be less pressure to raise rates.

According to the U.S. Bureau of Economic Analysis, in the month of September, the core Personal Consumption Expenditures price index increased 0.30% on a month-on-month basis and increased 3.10% on a year-on-year basis.

The PCE price index increased 0.50% month-on-month in September following a 0.30% increase in August. The index accelerated to 3.60% in September on an annual basis.

The U.S. economy expanded an annualized 3.40% in Q3 2026, compared to a 2.20% rise in Q2, and above expectations of 3.20%.

The U.S. Labor Department showed that for the week ending October 24, the initial claims for unemployment benefits decreased by 1,000, below market expectations of 194,000. The continuing claims fell by 21,000 to 1,701,000 for the week ending October 17, reaching their lowest level since early March 2023.

Currently, investors are betting on a 76.40% chance of a 25-basis-point interest rate hike at the December meeting of the U.S. Federal Reserve, according to the CME Group's FedWatch Tool.

According to a Wall Street Journal report, yesterday, U.S. Vice President JD Vance sent a letter to Iran's National Security Chief Mohsen Rezaei, urging Iran to return to negotiations quickly. Vance stressed that the official negotiations must address Iran's nuclear program.

Showing progress in diplomatic route, Vance wants to persuade U.S. President Donald Trump stop his planned attacks on Iran.

In addition, Qatar is working to convince Iran to allow U.N. inspectors to visit Iran.

Despite an official confirmation or response from Iran, market participants viewed these moves optimistically.

Expectations of a possible solution to the U.S.-Iran crisis through diplomacy increased, leading to a sharp correction in crude oil prices.

In line with Fed's moves, the European Central Bank also decided to leave the key interest rates unchanged despite elevated inflation, keeping the benchmark deposit rate at 2.50%.

The interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will remain unchanged at 2.50%, 2.65%, and 2.90% respectively.

The ECB President Christine Lagarde stated that though energy price rise increases the risks of higher inflation, underlying inflation has broadly remained stable.

Eurozone inflation climbed to 3.80% in September, its highest level in three years.

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