The US dollar remains under pressure in a post-Fed rate cut world

The greenback remains flat following the Fed’s recent pivot into a rate-cutting cycle. Last week, the US central bank cut interest rates by 50 bps. The US Dollar remains under pressure, but markets quickly shifted to a more anxious wait for the next rate call.

Here’s what you need to know on Tuesday, September 24:

The US dollar index remains pegged to the low following the Federal Reserve’s (Fed) 50 bps rate cut last week. DXY continues to rumble along the floor, grinding sideways just above the 100.50 level. US economic data is strictly mid-range on Tuesday, but investors will be keeping an eye on Fed Governor Michelle Bowman. Chicago Fed President Neel Kashkari warned on Monday that the Fed’s future pace of interest rate cuts could be slower than many expect over the course of next year, signaling that the Fed may be poised to rein in excessive rate cuts in the future.

EUR/USD is struggling to hold high territory to start the new trading week. Despite a general decline in greenback positioning, the euro was hit after pan-EU PMI (PMI) figures for September broadly missed the mark on Monday.

GBP/USD managed to post fresh gains on Monday, climbing to a new 30-month high near 1.3360. Despite UK PMI figures printing well below expectations to start the week, the recent bull run in the pound continues to be on the charts. However, political threats loom on the horizon, with British Prime Minister Keir Starmer warning that Britain’s domestic economy could be on a collision course with the “painful” economic reforms that are needed, particularly with UK inflation figures which turn out to be much tighter than in other countries. countries.

USD/JPY continues to challenge the 144.00 handle and the pair is struggling to develop a significant bullish level as the yen continues to make new highs against the US dollar. JPY traders will be keeping an eye on Bank of Japan (BoJ) Governor Kazuo Ueda on Tuesday and Japan’s Tokyo Consumer Price Index (CPI) inflation figures are due later in the week.

AUD/USD hit a new nine-month high on Monday, testing north of 0.6850 for the first time since December last year. Australian traders are jostling for position ahead of the Reserve Bank of Australia’s (RBA) rate call early Tuesday. Despite recent signs of a potential economic slowdown in Australia, the Australian labor market remains broadly tight and the RBA is expected to remain on hold on rates for now.

U.S. West Texas Intermediate (WTI) crude oil prices have recovered more than 10.5% from the bottom to the top since September 10th low offers of $64.75, the lowest prices of the key commodity since May 2022. Crude oil prices points to a Tuesday offer after this. it was announced that the US is deploying additional military personnel to the Middle East as Israel continues to expand its military campaign against Palestinian Hamas, which crossed the borders of Lebanon over the weekend. A new Israeli rocket barrage against Hamas targets in Lebanon has killed nearly 300 people and injured more than a thousand. Israel said the new round of explosive attacks was in retaliation for a recent Hamas rocket fire that killed three people in Israel.

Gold continues to benefit healthily from the Fed’s latest rate cut, with XAU/USD climbing to a new high just below $2,640. XAU/USD has closed flat or higher for all but one of the last 11 consecutive trading months, climbing more than 45% in value from last October’s lows near $1,800.