The U.S. dollar slipped on Tuesday morning amid rising bets that the Federal Reserve will introduce interest rate cuts during the early stages of next year. This comes after the Federal Reserve left its interest rate in the range of 5.25% to 5.50%; its highest in over two decades.
Markets have become increasingly confident that the Fed will lower its interest rates at its March meeting next year. “The Fed, having failed to push back on the aggressive dovish repricing we’ve seen over the last six weeks or so, has given license for financial conditions to loosen further,” Michael Brown, a market analyst at Trader Xin London observed.
The dollar index, which measures the greenback against a basket of other major currencies, slipped 0.07% lower to 102.55, with the euro gaining ground against the dollar, rising 0.22%. The British pound was down 0.31% against the dollar at $1.2641 while the greenback was up 0.51% against the Japanese yen at 142.935.