FX.co ★ Dollar Little Changed at 3-Week Low

The dollar index was little changed around 101.7 on Thursday, hovering near a three-week low as doubts about the durability of the AI-driven rally grew. Earnings from several megacap technology companies failed to meet lofty investor expectations, prompting a reassessment of the recent AI trade.

At the same time, geopolitical tensions in the Middle East intensified amid reports that the US and Israel are preparing additional strikes on Iran following the midterm elections. Heightened risk aversion and increased demand for safe-haven assets dominated market sentiment, bolstering the Japanese yen and Swiss franc against the dollar. In contrast, the euro underperformed and was among the weakest major currencies.

Looking ahead, the Federal Reserve will announce its monetary policy decision next week. Futures markets currently imply about an 89% probability that the Fed will keep interest rates unchanged, while the likelihood of a 25 basis point hike in December has risen to roughly 76%.