Dollar Falls to Lowest Level in Over Two Months Amid Rate Cut Bets

The US dollar fell during Tuesday trading, with the dollar index dropping below 98.1 points, marking its lowest level in over two months as market bets continue that the Federal Reserve has room to cut interest rates again next year.

Delayed US economic data did not significantly alter investors' expectations, who are still pricing in the likelihood of two additional rate cuts in 2026.

The US jobs report showed the economy added about 64,000 jobs in November, exceeding expectations, but the unemployment rate unexpectedly rose to 4.6%, the highest level since 2021, reinforcing signals of a labor market slowdown.

Meanwhile, retail sales remained stable month-on-month, affected by a decline in sales at car dealerships and gas stations, although spending remained relatively strong in other sectors, reflecting a mixed picture of consumer activity.

The dollar notably declined against the British pound and Japanese yen, with a limited drop against the euro, as markets await monetary policy decisions from major central banks.

The European Central Bank is expected to keep interest rates unchanged, while the Bank of England is likely to cut rates by 25 basis points, and the Bank of Japan is expected to raise rates.