FX.co ★ Dollar Near Two-Month Lows Amid Fed Comments

The dollar index remained near two-month lows at approximately 98.3, marking its third consecutive weekly decline. This movement comes as investors evaluated recent comments from the Federal Reserve and reassessed interest rate projections for 2026. The Federal Reserve recently implemented a 25 basis point cut, bringing rates down to between 3.50% and 3.75%. This marks the third consecutive rate cut and suggests expectations of only one more reduction next year.

Kansas City Fed President Jeffrey Schmid, who opposed this decision, cautioned that inflation levels remain excessively elevated and recommended that monetary policy maintain a moderate restrictive stance. Meanwhile, Chicago Fed President Austan Goolsbee also resisted the rate cut, indicating a preference to await further inflation data; however, he anticipates more frequent rate reductions in 2026 compared to his colleagues.

In contrast, Philadelphia Fed President Anna Paulson, who will soon join the FOMC voting members, adopted a more dovish position, highlighting concerns over labor market weaknesses as being more significant than inflationary pressures. Additionally, global economic developments, including hawkish policies in Australia, Canada, and Europe, have contributed to the dollar's broad weakening trend.