US Dollar Remains Weak Near Lowest Level Since October as Markets Await Rate Path Clarity

Washington | EcoPulse24

The US dollar continued to trade weakly during Monday’s session, slipping slightly below the 98-point mark and moving sideways near its lowest level since early October. The subdued performance comes amid reduced liquidity due to year-end holidays and as markets continue to price in interest rate cuts for the coming year.

Investors are still factoring in two additional rate cuts during 2026, despite mixed signals from Federal Reserve officials regarding the future path of monetary policy. The majority of Fed policymakers currently foresee just one further rate cut. This division reflects the prevailing uncertainty in currency markets as the US monetary policy cycle enters a new phase.

Meanwhile, markets are awaiting an announcement from President Donald Trump on the successor to Federal Reserve Chair Jerome Powell in early 2026 - a decision expected to have a direct impact on rate cut expectations and the dollar’s direction in the period ahead.

This week, traders are focusing on the release of the Federal Open Market Committee (FOMC) meeting minutes scheduled for Tuesday, seeking clearer signals on monetary policy direction and policymakers’ assessment of inflation and growth risks.

On an annual basis, the US dollar appears set to register a loss exceeding 9% in 2025, marking its steepest decline since 2017. The drop is attributed to the strict trade policies pursued by Trump, especially broad tariffs, as well as statements that have raised concerns about the Federal Reserve’s independence.